In an effort to increase consumer confidence and engagement in the industry the concept of a protection product quality mark has been suggested. Would you broadly support this idea, and what issues would it raise?
Ashley Clark, Advisers United.com
A protection product quality mark, while appearing desirable, is in my opinion, based upon previous attempts of a similar nature, a complete waste of time, effort and money.
Remember ‘CAT’ Standard Mortgages? Remember ‘CAT’ Standard ISAs? I bet many advisers let alone consumers cannot remember what CAT stood for (Charges - Access - Terms).
Stakeholder pensions were so unsuccessful that we now have NESTs coming soon (the National Employment Savings Trust). I would also guess that most professionals reading this article, let alone consumers, have never heard of the Pension Quality Mark (‘PQM’) for company money purchase pension schemes launched last year. To offer a quality mark for protection plans may only confuse consumers into thinking a product is suitable when in fact it may not be. In addition, who decides, and on what criteria you award a quality mark, the risk of confusion is even greater.
A quality mark will only ever work if the quality mark brand is stronger than the providers’ own brands. The ‘big gun’ banks and insurers will always spend more on their own brands compared to the marketing budget of ‘not for profit’ quality mark organisations. It is therefore doomed before it starts.
Let the ABI continue its job of agreeing core definitions and let market forces drive protection. What we need from providers are product innovations that engage both adviser and consumer alike, not pretty quality mark logos that add no value.
Roger Crocker, PMS
Clearly, if the scheme succeeds we all benefit, and of course, any initiative that drives up quality in the industry is to be welcomed.
However, there are a number of key issues that I would like to see addressed. First, who decides what constitutes ‘quality’?
Clients’ needs are different, so surely what constitutes quality in the eyes of one customer will be different from the views of other customers. Second, who would be responsible for administering the scheme and who will end up footing the bill?
My other reservation centres on whether providers will be tempted to design products to secure the quality mark rather than innovate and design for changing consumer needs.
I am left wondering how truly effective the proposed quality mark will be in instilling consumer confidence?
I think it unlikely that the quality mark would be any different, as ultimately consumers actively engage through advisers and derive confidence from receiving quality professional advice tailored to their individual circumstances.
Increasing customers’ access to professional, independent financial advice should be the focus of any initiative to engage consumers, but a product quality mark will do no harm if administered carefully and cost effectively.
Mark Jones, LV=
If we truly believe that UK consumers would benefit from increased levels of personal protection then increasing consumer confidence and engagement is surely the biggest challenge for our industry. I do, and so I fully support activity that will achieve this.
A quality mark will say these are the products that the industry believes meet a minimum standard. Experience suggests this approach is at huge risk of becoming an internal debate about what good enough looks like, who decides and monitors that threshold and how to avoid the stifling of innovation and competition.
Raising Standards, arguably, had similar laudable intentions but ultimately failed.
Is the issue that consumers feel unable to identify a product that is good enough and hence need this guidance? Or is it they do not consider protection to be relevant to them and hence product choice for the majority is currently irrelevant?
We balked at the very large sums involved in initiating a large industry wide consumer protection media campaign. This was under standable, particularly in the current economic climate.
If we don’t emotionalise protection, people will only buy if they think they have to and product quality marks will not change that.
Graham Harvey, Axa Protection
Any development that increases consumer confidence and engagement with the protection industry gets my vote. However, I’m not convinced that a quality mark alone is the complete answer to this issue.
It would go some way to improving consumer trust. This can only be a good thing if it goes some way towards closing the protection gap.
My concerns stem mainly from its inability to include important elements of the cover such as service, claims philosophy and a provider’s financial strength and brand. These are the elements that need to be considered when choosing a provider.
I would also question whether a quality mark can help address the industry non-disclosure and claims payment issues. Providers and the ABI have been working hard to solve all the problems attached to these issues and a product quality mark won’t overcome them on its own.
Finally what impact would a quality mark have on competitiveness in the market? Would it drive providers to offer almost identical products? It would be a disadvantage if competitiveness was lost due to a product standardisation in order to adhere to quality mark criteria.
What we need is an initiative that can cover all elements of the product offering.
