The Intermediary – October 2026 - Flipbook - Page 76
P RO T E C T I O N
Opinion
Misconceptions are
holding back the
use of trusts
T
he Financial Conduct
Authority (FCA) wants
to see more protection
policies placed in trust.
This is one of the more
complex areas of life
insurance and assurance. Greater
education is the key, and we’ve seen
the effect that a concerted effort on
adviser awareness can have.
We’ve seen the number of policies
placed in trust by our members nearly
treble in five years. That’s quite an
achievement. But every adviser out
there needs to share this focus if we’re
going to answer the FCA’s call as
an industry.
That’s why we wanted to share
some of the key things we’ve learned
in recent years that hold back use of
trusts, resulting in greater risk of
consumer harm.
False assumptions
Beneficiary nominations aren’t the
same thing as puing a policy in
trust. A nomination and a trust can
have very different legal and estateplanning consequences. It’s important
to understand the difference. Some
advisers also think that a policy
can easily be put in trust at a later
date, saving them the time involved
in giving the customer advice and
explaining how they work.
Technically, a policy can sometimes
be assigned or placed in trust later
on, but this can have different tax
consequences. HMRC specifically
recognises that transferring an
existing policy can constitute a
transfer of value.
So timing is important, and doing
it at a later date shouldn’t be treated
as equivalent to establishing the
appropriate arrangement at the outset.
Another common bias we’ve
encountered concerns Inheritance Tax
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The Intermediary | October 2026
(IHT). Some advisers presume tax is
the main reason trusts are used. This
couldn’t be further from the truth,
and it’s not why this issue is on the
FCA’s radar.
The advantages of trusts that strike
right at the heart of the Consumer
Duty are control over beneficiaries,
speed of access to proceeds, and
avoiding a situation where funds
simply become part of the estate.
These are the key things advisers
should understand before having
protection conversations with
consumers. But then comes the
challenge of not only identifying
where their needs are but succeeding
in geing them to recognise them.
This is where the interaction and
expertise of the adviser is the crucial
factor. We know the industry has
more to do here – the FCA reminded
us all that 58% of adults have no
protection products, and 59% of
those without protection have never
considered their protection needs. On
top of that, nearly 61% of mortgage
holders don’t recall their adviser ever
mentioning protection (AMI).
This is despite the fact that a failure
to address consumers’ protection needs
while dispensing mortgage advice is a
breach of the Consumer Duty.
Complex conversations
One of the reasons this happens is a
reluctance among some advisers to
have what they perceive as a more
difficult conversation with their
customer. Let’s face it, the rest of
the conversation has been about a
mortgage they want and they haven’t
needed to be persuaded.
But isn’t that the point? Protection
sales aren’t really about persuasion. If
you ask the right questions and offer
the right information, the customer
will drive the conversation themselves
JOHN SCRIVENS
is protection lead
at Stonebridge
in the same way they did for their
mortgage. So the misconception here
is a belief that consumers don’t want
to talk about protection or their ability
to stay in their own home should the
unexpected happen. They definitely
do, it’s how you frame it.
Questions such as ‘if you died
tomorrow, would you want your
children to be able to stay in your
home?’ and ‘how important would it
be that your loved ones could access
this money without waiting for your
estate to be administered?’ create
new perspectives.
In relation to trusts, it can even
be about slowing down the receipt of
funds. Some policyholders wouldn’t
want their children to receive large
lump sums while too young.
There’s much more to it than
that, but these examples show how
protection, and use of trusts, require
conversations that recognise the
psychological barriers on issues many
would rather not have to think about.
But even that reluctance is founded on
the misconception that they can’t do
anything about these vulnerabilities.
We know beer, and we address all
of these challenges on the Stonebridge
Skills Development Programme,
which teaches advisers how to have
these difficult conversations and ask
the right questions.
Life policy sales can become
bespoke and tailored products. For
us as a network, the regular use of
trusts, when appropriate, is usually a
prey good indicator that an adviser
is having valuable conversations
around protection in a proactive and
sophisticated way. ●
