23rd April 2025

Panel Thinking: Reassessing Adviser Restrictions in Light of Consumer Duty

This may raise concerns among colleagues in networks and affinity groups, but it is a discussion that warrants wider industry attention. It also aligns with key themes in the FCA’s recent Market Study (MS24/1.2): namely, the role and impact of insurer panels on consumer outcomes.

A Perspective from the Whole of Market

Having worked as a whole of market adviser for nearly four decades, I can attest to the significant advantages, both ethical and commercial, of maintaining unrestricted access to the full insurer landscape. In contrast, advisers limited by panels may find their ability to deliver best outcomes for clients materially constrained.

Some years ago, I was approached by a firm operating under a panel model. Curious about its suitability, I posed a specific question: which of the six panel insurers would they recommend for a female, smoking, truck driver seeking income protection?

The answer: “Any of our panel insurers.”

What this response missed was critical: friendly societies, often absent from such panels, do not apply loadings based on gender, smoking status, or occupation. As a result, they offer significantly more competitive premiums - an essential factor for clients in higher-risk categories. Ignoring these options can render advice unfit for purpose.

The Limitations of the “Best Six” Argument

Panel-based firms often argue that a small selection of insurers has been carefully chosen based on research indicating superior product offerings. However, this assertion is difficult to evidence and can inadvertently imply that advisers are not equipped to evaluate a broader market independently. 

This restriction undermines Consumer Duty principles - particularly around delivering fair value - and opens the door for whole of market advisers to offer demonstrably better client solutions, capturing both immediate and ongoing business as a result. 

Simplification vs Suitability

One rationale often cited is that panels simplify the advice process, particularly for newer advisers. While this may reduce training costs and streamline CPD requirements, it raises a more fundamental question: if an adviser cannot confidently navigate the wider product landscape, are they truly ready to provide advice? 

Whole of Market or Multi-Tied by Another Name? 

Another concern is the blurring of definitions. Some firms continue to present themselves as “whole of market” while operating within the confines of a limited panel. This risks misleading clients and does not align with the transparency and clarity demanded by Consumer Duty.

The Financial Incentives Behind Panel Design

The reasons behind these restrictions are unsurprising. Enhanced commission terms in exchange for volume business and financial contributions from insurers to support training and development are common. While commercially understandable, these arrangements can become problematic if they result in inflated premiums or unsuitable recommendations.

Compliance vs Client-Centricity

From a network or affinity group perspective, limiting product choice may simplify compliance oversight. However, such operational convenience must not come at the expense of what is best for the client. The balance between business efficiency and consumer benefit must be continually scrutinised.

A Call for Transparency

It is essential that firms operating with limited panels are transparent with their clients about this fact. In line with Consumer Duty, clients should clearly understand the basis upon which recommendations are made, and whether more suitable options may exist outside the adviser’s restricted remit.

In Conclusion

This issue merits broader debate - not only in the context of the FCA’s Market Study, but also in terms of our collective responsibility to prioritise the interests of clients above operational convenience or commercial gain. 

As the industry evolves under the watchful eye of Consumer Duty, now is the time to reflect critically on the structures we operate within and ensure they are fully aligned with the principles of trust, transparency, and client-first advice.

Alan Lakey, CI Expert

Protection