Untangling the net

Technology has come a long way in the past few years. Some readers will remember using the phone to obtain quotations, and what a refreshing change it was when the likes of Scottish Provident’s QUOD system became de rigueur to quote and apply for protection policies.

Nowadays, most advisers use a portal, enabling them to get up-to-the-minute quotes from their chosen providers in a matter of seconds, thanks to the portals’ clever messaging systems. Advisers can then go on to apply to the chosen provider without having to re-key the same information, thus saving time and minimising on potential errors.

With the continued growth of the internet, consumers are now used to researching their buying decisions on the web, from holidays to electrical goods and their weekly grocery shop. So why wouldn’t they for their financial services requirements?

Indeed, consumers are able to obtain quotes for many types of financial services transactions – from annuities to life and mortgages – with the likes of Moneysupermarket and even Tesco, Sainsbury’s and Asda, which offer ­quotations instantly through their websites.

This trend is set to continue, with home furnishers The Range being the latest high street retailer to offer protection and other quotations on their website. Indeed, some distributors now have the functionality for consumers to apply for their chosen product directly to the provider after having selected a quotation. 

Many intermediary firms are also offering a quotation functionality on their website, perhaps taking the ‘if you can’t beat them, join them’ approach.

Other intermediaries have reported that some leads they have purchased from some of the well-known lead generation companies have included their own clients – perhaps because they were not able to obtain a quote from their own financial adviser’s website and therefore navigated to a site where a quote was available.

There is no doubt that more intermediary companies see the provision of a quotation facility on their website as a healthy way of generating their own leads.

But many consumers expect not to receive advice when they make their buying decisions online, so the ‘non-advised’ sale or ‘execution-only’, in old money, is a significant part of the financial landscape these days.

Providers are embracing the growth in this sector, with several players having launched no-frills life products in recent months and seeing significant volumes of new business as a result.

REGULATORY PRESSURE

That said, the FSA stated in its policy statement PS 10/13 – published last September – that it would consider further the costs and benefits of introducing professional ­requirements for the selling of pure protection. The work will be done in the context of wider considerations about how to raise standards in these sales.

This is because the regulator is concerned that too much emphasis is currently placed on pure protection being sold on price, with the features of the product not being made as clear to the client as they could be.

This could mean that following the implementation of RDR in December 2012, the FSA will introduce new rules for protection products making them more expensive to transact.