Quill PR is delighted to have been shortlisted in the Investment Week Fund Manager of the Year Awards Marketing and PR Partner of the Year (Asset and Wealth Management) category.
The new category has been introduced to recognise groups supporting asset and wealth management firms in the UK.
The nomination reflects work in client service/support and initiatives in the industry to help champion investing or help the wider asset management and wealth sector.
When Saba Capital attempted to oust the boards of seven UK investment trusts, it highlighted that one of the reasons it did so was because of their widening discounts. This is not just an issue for individual investment trust companies, but for the sector.
Quill PR asked Peter Hewitt, fund manager of CT Global Managed Portfolio Trust, his thoughts on why discounts in the UK investment trust sector have widened over the past couple of years and what can be done to close them.
Peter Hewitt, Fund Manager of CT Global Managed Portfolio Trust, commented: “When it comes to investment trust discounts, I think we need to understand why it’s become such an issue. The UK economy hasn’t grown as fast as it could and, coupled with the rise in inflation and interest rates, there was an absence of buyers which did not supply demand for shares – so of course discounts for certain trusts were going to widen. In 2021, the average sector discount was at 2%, and over the last few years it increased to 16%. But there’s not a lot you can do to about this – it’s not easy to fight against important macro trends.
“However, the boards and management of investment trusts now have to be rigorous in closing the discount gap and issue share buybacks. In the past, they have been reluctant to do so due to fears that it will drastically shrink the size of their trust, to the point that private wealth managers might not be interested in them if they are too small but if more investment trusts did this, yes, it may shrink and the investment trust sector may well be smaller, but they’ll keep shareholders happy and ensure that they have right rating and a better share price.
“The increase in AUM (Assets Under Management) targets for wealth managers has significantly reshaped the investment landscape. With the amount moving from £100m to around £500m, smaller investment trusts and niche funds often struggle to gain traction with larger wealth managers and institutional investors.
“In order for share buyback policies to make a difference, they would need to make sure that the quantum of the buybacks is materially different and not just one-offs. With this in place there would be a lot less discount volatility, which would arguably be more attractive for potential buyers such as private wealth managers and multi-asset funds.”
Perhaps in the fullness of time, we might thank Saba Capital for highlighting the widening discount in the UK investment trust sector. However, for now the boards of investment trust companies must look to closing the discount gap and ensure that their shareholders are happy.
Quill PR has been shortlisted for the Citywealth Brand & Marketing Awards 2025 under the category: Communications & PR Agency of the Year.
The awards recognise the best brands emerging in a consolidating financial industry, highlight the contributions of hundreds of marketing, business development and public relations professionals within the wealth management industry, and recognise the teams who excel in supporting the business profit and navigate the reputational risk for their organisations seamlessly.
Our friends and associates are encouraged to vote and a panel of judges makes the majority decision.
The judging panel includes Lawrence Gosling, head of PR, Comms and Content at Artemis Investment Management, Tracey Rodgers, head of client intelligence at Ogier and Kim Lansdown, director of strategy at Fladgate.
Sam Emery, managing director at Quill PR said: “We are delighted to receive a nomination for these prestigious awards for the second year running. It is gratifying to be recognized within such a competitive field.”
Having put forward proposals to seven UK investment trusts during December 2024, Saba Capital called for a general meeting with each of the Boards to decide their fate. These investment trusts include: Herald Investment Trust, Baillie Gifford US, CQS Natural Resources Growth & Income, European Smaller Companies, Henderson Opportunities Trust, Keystone Positive Change and Edinburgh Worldwide.
Following Edinburgh Worldwide’s general meeting on Friday 14 February, all seven of the investment trusts have rejected Saba’s proposal to oust the current Board and replace them with Saba appointed directors in what has been considered a record voter turnout at each general meeting.
And now, the further announcement from Mind the Gap campaign of Saba’s intention to requisition the Boards of CQS Natural Resources, European Smaller Companies, Middlefield Canadian Income and Schroder UK Mid Cap to propose to transition each of these trusts into an open-ended structure to eliminate the discount.
This has been considered one of the biggest shake-ups in the UK investment trust sector.
Quill PR has asked the opinions of some of the leading investment trust managers and commentators: Ben Conway, Head of Fund Management & CIO of Hawksmoor Investment Management; Peter Walls, Fund Manager of Unicorn Asset Management; and Peter Hewitt, Fund Manager of CT Global Managed Portfolio, on why this happened and why it’s important.
Question 1: Do you think that UK investment trusts can learn from this, and is there a way to protect against such aggressive strategies?
Ben Conway, Head of Fund Management & CIO at Hawksmoor Investment Management commented: “Yes, there is plenty both Boards and investment advisers (managers) can learn from this. The best way to prevent activists like Saba from appearing on one’s register is to prevent the opportunity from appearing in the first place. Discounts, even on portfolios of liquid securities, had become too wide and too persistent. Boards should have been enacting more measures to narrow discounts. The most obvious of these are share buybacks – which should have been enacted sooner and in greater size. I would not look too kindly on any reactive initiatives designed to prevent activist shareholders from appearing on registers. Any changes should benefit all shareholders – and close discounts by increasing demand. Anything that attempts to exclude a certain type of investor from a register is not good governance. The analogy we like to use is the wasp. No one wants a wasp at their picnic, but without them, our ecosystem collapses. Activists are an essential part of a healthy investment trust ecosystem: they provide discipline.”
Peter Walls, Fund Manager of Unicorn Asset Management, said: “Saba’s ultimate strategy will only become clear towards the end of this saga but so far it looks like a hybrid model. Traditional activists and arbitrageurs look to buy as many shares as possible at the widest possible discount and then agitate for change. It’s been going on for decades, aided by the development of ever more sophisticated and liquid financial instruments.
“Of course, the best way to protect against such strategies is not to let your shares trade at a tantalising discount in the first place and to ensure that your shareholders remain loyal when times get tough. Neither of these tasks are always particularly easy as markets, investment styles and investor sentiment are all cyclical. And for Investment Companies with illiquid underlying investments the challenge is often greater (although the potential for arbitrage may be less).
“I’m not inclined to support the idea of introducing protections against certain large investors as that would go against the whole idea of shareholder democracy.”
Peter Hewitt, Fund Manager for CT Global Managed Portfolio, commented: “Firstly, I think it’s important to note that this was not an attempt by Saba Capital to help improve the trusts and help close the discount. This was more of an attempt to gain the management of these trusts. They had no support in this endeavour by anyone outside of their organisation as it was pretty clear that their proposal would benefit no one but Saba.
“To prevent this kind of action from happening in the future, investment trusts will need to close the discount gap. The Board of Directors and management must be more alert about their trust’s discount and be more rigorous in closing it. It is true that the discount in the investment trust sector has widened quite a bit, which formed the basis of Saba’s proposal. In 2021, the average sector discount was at 2% and now it is at 16%.”
Question 2: How do you think the investment trust industry will change?
Ben Conway, Head of Fund Management & CIO at Hawksmoor Investment Management commented: “ ‘Relevancy’ is the watchword for us. Is the trust relevant? Trusts that lack relevancy will not see demand for their shares return and thus the current crisis is existential for them. Ultimately, a Board needs to be sure that the trust is offering something that cannot be offered in other forms. The most obvious type of trust at risk is that which invests predominantly in liquid listed equities. Such a strategy can be replicated in daily dealing in open-ended fund form (offering greater liquidity to the investor without the discount volatility of trusts). The use of gearing is not sufficient to justify their existence. We believe the trust structure is best utilised to access less liquid securities – both smaller listed equities and assets such as property, infrastructure, ships and private equity to name a few.”
Peter Walls, Fund Manager of Unicorn Asset Management, said: “The sector has faced so many headwinds in recent years (I think we are all familiar with these!) that change was already afoot as referenced by the record share buy-backs and other corporate actions seen in 2024. This trend has continued into 2025 with announcements of more rigid discount controls (Finsbury Growth & Income for example), redoubled share buy-back activity (Harbour Vest Global Private Equity) and other measures to dampen discount volatility.”
Peter Hewitt, Fund Manager for CT Global Managed Portfolio, commented: “The industry will have to cross the Rubicon and realise that their trust will become smaller if they want to close discounts and ensure their shareholders are happy. To do this, they will have to issue share buybacks.
“To make a difference to discounts, the quantum of the buybacks must be materially different and not just one-offs – you can make a difference on discounts through sensibly managed buyback policies. Not a lot of trusts want to do this because it will shrink the trust and they fear that private wealth will not be interested in them if they are too small. But what they have to realise is that it’s necessary if they want to keep their trust and get the right rating and share price.
“If this was taken onboard, you would have a smaller sector but there would be a lot less discount volatility, which would arguably be more attractive for potential buyers such as private wealth managers and multi-asset funds. Saba has thrown a light on this which we might be thankful for in the fullness of time.”
Question 3: Saba claimed that the UK investment sector is broken, do you think they’re correct in this?
Ben Conway, Head of Fund Management & CIO at Hawksmoor Investment Management commented: “I don’t think “broken” is the right word. I would say “in crisis” – but the challenges the sector faces aren’t insurmountable. Demand for investment trust shares is impaired as a result of three main headwinds: cost disclosure rules, wealth management consolidation and sub-standard governance. Whether the sector is in cyclical or structural decline is largely academic if the cycle takes too long to turn up! I think there is a deep pool of potential demand that should be marketed to with far greater alacrity (except for a few investment managers who I know are at the vanguard of such initiatives) – and that is the DC pension fund industry. The trust structure is in many ways superior to the LTAF in accessing illiquid assets. It would be a shame if DC pension funds invested only in LTAFs to access such assets. Even then, LTAFs could and perhaps should invest in investment trusts. Either way, demand from traditional cohorts of investors has collapsed and will not return soon. If it is not replaced, the supply side will have to do the work, and that means shrinkage.”
Peter Walls, Fund Manager of Unicorn Asset Management, said: “Absolutely not. Leaving aside that the sector has stood the test of time through every possible conceivable scenario the Investment Company structure remains that most appropriate corporate entity for long term investment, particularly in less liquid specialist areas of investment. Those willing to take a truly long view have been well rewarded by investing in the sector and I have every confidence that will continue to be the case.”
Peter Hewitt, Fund Manager for CT Global Managed Portfolio, commented: “I think that it is obvious as to why Saba would think that. Inflation and interest rates were rising and there was an absence of buyers, which could not supply demand for shares, so of course discounts for certain trusts were going to widen. But there’s not a lot you can do to combat this, it’s not easy to fight against pretty important macro trends. However, I wouldn’t say that the UK investment sector is broken, but it could improve in some areas.
“Aside from closing the gaps on discounts through continuous share buyback options, I think that Boards need a better understanding of the investment trust structure. Because investment portfolios invest in a whole variety of areas, such as equities, bonds, commodities etc. they are all wrapped up and called investment trusts. Whilst the Boards of investment trusts want to do the right thing generally, they often have expertise in many different investment areas but lack expertise in the management of the investment trust structure. Expertise in this area is paramount as they would be able to make more effective decisions to run the investment trust, such as the use of marketing strategies and how to handle discounts.”
Question 4: AIC has launched its ‘My Share, My Vote’ which seeks to end poor practices among some investment platforms and providers, such as failing to pass on voting rights and information, charging customers to vote, and declining to vote shares even when requested to do so. Do you agree with the AIC ‘s solutions and that it should be mandatory for platforms to notify investors about voting rights unless they opt out? Also, should this become part of Consumer Duty?
Ben Conway, Head of Fund Management & CIO at Hawksmoor Investment Management commented: “I am fully supportive of the AIC’s campaign here. It should absolutely be part of Consumer Duty that platforms play a greater role in enabling shareholder engagement. In fairness to some retail platforms, their business models enable very low-cost custody and trading of investment trust shares. We should not necessarily expect costs to stay as low if more demands are made on them. It is not just retail platforms to blame. Some institutional platforms simply charge far too much to enable voting and it would be healthy if a light was shone on pricing practices there.”
Peter Walls, Fund Manager of Unicorn Asset Management, said: “All in favour of all shareholder voices being heard but not so keen on mandating. Following the unbelievable damage wrought by the cost disclosure fiasco over the last 5 years I strongly believe that Investment Companies should continue to abide solely by the existing rigorous listed company rules and there is no justification for becoming embroiled in Consumer Duty legislation.”
Peter Hewitt, Fund Manager for CT Global Managed Portfolio, commented: “Yes, it should most definitely be mandatory. Shareholder voting rights are incredibly important when it comes to running a trust, they can decide the future of it, as we have seen from the voting results of Saba’s proposals. From my experience, Interactive Investor is one of the best at this. When it comes to your voting rights, they contact you immediately when a vote is about to take place and provide all the necessary details. The importance of voting rights cannot be overstated.”
It seems that the investment trust sector is united in its response to Saba’s campaign against the UK investment trust industry and on ways to improve the sector that does not include ousting the Board of several respectable investment trusts.
It will be interesting to see how Saba fares in its Mind the Gap campaign. But what is clear to see is that Saba Capital is here to stay in the near future.
McKinley Sadler is a Senior Account Executive at Quill PR.
Journalists’ inboxes were heaving under the weight of comments on the Bank of England’s announcement that the interest rate was being cut 25 points to 5%.
And frankly the industry response is understandable given the long-awaited cut after years of high rates.
The cut will prove only a chink of light for those on variable mortgage interest rates but experts are seeing encouraging prospects for markets.
Emma Moriarty (pictured above), portfolio manager at CG Asset Management says: “While not completely unexpected, today’s rate cut by the Bank of England has buoyed the gilt markets, and has also improved wider equity market sentiment. Listed funds in some of the longer duration asset classes – such as property and infrastructure – have been clear beneficiaries of this.
“While the Monetary Policy Committee did not give guidance on the pace and quantum of rate cuts to come, markets are now pricing in an additional two cuts for 2024. This seems in line with the downward direction of travel in headline inflation to date. Looking ahead, the key question will be how many rate cuts the Bank can reasonably make from here.
“Despite falling headline inflation, wage growth and services inflation remain sticky and elevated, and the Bank has warned that headline inflation looks set to increase over the latter part of this year. In a similar vein, consumption and growth have been stronger than expected, and the new Labour government’s focus on state-directed growth may mean that inflation – and interest rates – need to stay higher for longer than markets currently expect.”
Stuart Widdowson, portfolio manager at Odyssean Investment Trust says the cut will support investors increasingly looking to small to medium sized UK companies as market sentiment turns in the sector.
“Until recently people were very reluctant to look at new investments. What we hear from brokers is that people are interested now: it’s not just M&A activity and the mood music of our peer group is generally more positive.
“We, and other fund managers, are seeing shareholders and potential shareholders over the last quarter more open to putting assets into the small to mid-cap sector now and that’s a significant change from Q4 last year.”
Widdowson says investors may also be looking for stocks with a global reach beyond the Magnificent Seven.
“We do think one of the key catalysts for people reassessing UK equities is basically the momentum trade of the big seven stopping. We’re seeing people being open to invest in the UK and small to mid-caps and the UK is seen as a relatively safe haven now compared with the rest of Europe.”
As Emma alludes, the Monetary Policy Committee was cautious in explaining it’s decision to avoid any hopes of this being a start to a continued fall in rates.
It said: “Monetary policy will need to continue to remain restrictive for sufficiently long until the risks to inflation returning sustainably to the 2% target in the medium term have dissipated further. The Committee continues to monitor closely the risks of inflation persistence and will decide the appropriate degree of monetary policy restrictiveness at each meeting.”
But, hey, let’s take the chink of light – and hope for more to come.
Stephanie Spicer is head of content at Quill PR
The state pension has been in the news a lot lately with much moaning about the delayed payment of pensions to women of a certain age and different levels of payment to men and women of a certain age.
The Women Against State Pension Inequality (WASPI) argues that women born on or after 6 April 1951 to 5 April 1953 were informed too late in the day that their state retirement age was increasing, leaving them little time to re-plan for their retirement.
Then there was the recent annual rise in the state pension of 8.5% (matching wage growth which was higher than the two other measures of either inflation or 2.5% – the so-called triple lock). While this was the largest many have seen, it is not being uniformly applied over all those in receipt of the state pension. Individuals who reached retirement age before 2016 are in receipt of the old style state pension comprised of two elements: the basic state pension (based on national insurance contributions) and the additional state pension (based on earnings and benefit claims). The shortfall arises because the triple lock rise only applies to the basic state pension. The additional element only rises by inflation ie 6.7% and not the 8.5%.
Of course, no-one should be relying on the state pension – on its own it will support only a fairly impoverished retirement. The state pension should be considered just one element of one’s income in retirement.
While the state pension has always been relatively egalitarian, amounts of private and company pensions often vary for men and women. Statistically men tend to have bigger pension pots than women. According to research from Legal & General, the pensions gender gap starts initially at 16% but ‘can double by the time women reach their 40s. By the time they’re in their fifties it could be 51% and finally when they reach retirement their pension savings could be 55% smaller on average’ than their male counterpart.
Many people may not have had access to a company pension or their wages have been too low to build up a meaningful private pension. Some may have not had long enough in the work force to save adequately. Common reasons for the disparity in pension pots between men and women include the fact that women are or were more often those at home looking after children or other dependents.
The latter situation could be the same today. But with the introduction of auto-enrolment meaning individuals have to actively opt out of a company pension, the argument of no access and no employer contributions wanes – although not for those under age 22 or earning less than £10,000 per year.
In the financial year 2022-23, 0.8% of workers opted out of their workplace pension scheme, according to Gov.uk. The cost of living crisis hasn’t helped. Without nannying too much employers need to highlight to their staff importance of staying invested in a company pension – it is not just the employee contribution, but the employer contribution and the ‘free money’ of the tax relief applied on contributions.
The state pension system is devilishly complicated and only the government can change that! Now is the time for a campaign by the government to explain how it works, how the employer pension system works, how private pensions work – frankly how pensions work so that, come every individual’s retirement they have a pension that does work.
Stephanie Spicer is head of content, Quill PR
Photo by Francesco Gallarotti on Unsplash
courtesy of Markus Spiske on Pexels
In a historic turn of events, the 28th Conference of the Parties (COP) concluded with a groundbreaking agreement to “transition away from fossil fuels.” This marks the first time such an explicit commitment has been incorporated into the final agreement at a COP. However, despite this unprecedented move, some nations advocated for more robust commitments, raising concerns about potential loopholes in the finalised language.
The decisive statement read: “Transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achieve net zero by 2050 in keeping with the science.”
In addition to the overarching agreement, several world leaders pledged commitments designed to accelerate progress toward achieving the 1.5°C target established during the 2015 COP21, also known as the Paris Agreement.
This landmark accord, signed by 196 parties, aims to restrict the rise in global average temperature to 1.5°C above pre-industrial levels by the end of the century. Notable commitments from COP28 include:
Renewable Energy Surge: 130 nations pledged to triple global installed renewable energy generation capacity to at least 11,000 GW by 2030. Concurrently, they committed to doubling the annual rate of energy efficiency improvements from 2% to 4% each year until 2030.
Cooling Emission Reduction: 67 nations vowed to collaboratively reduce cooling-related emissions across all sectors by at least 68% relative to 2022 levels by 2050.
Nuclear Energy Expansion: 22 nations signed the Declaration to Triple Nuclear Energy, aiming to triple global capacity by 2050.
Oil & Gas Industry Commitment: 50 fossil fuel producers endorsed the Oil & Gas Decarbonisation Charter, voluntarily agreeing to cease flaring excess gas by 2030 and eliminate leaks of methane, a potent greenhouse gas.
Sustainable Agriculture and Food Systems: 153 nations committed to the Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action, recognising the need to address the impact of food production and land-use changes on carbon emissions.
Despite these additional pledges, the International Energy Agency (IEA) tempered optimism by calculating that the full implementation of COP28 measures would merely narrow the emissions gap related to energy consumption by one third by 2030, in comparison to the existing trajectory towards a 1.5°C scenario. The Financial Times quoted Fatih Birol, CEO of the IEA as saying: “It is good, but it is not good enough.”
While global progress continues towards decarbonisation and a shift away from fossil fuels, meeting legally binding targets necessitates significant strides forward and bold policy developments that have yet to materialise. The challenge ahead lies in turning commitments into concrete action to ensure a sustainable and climate-resilient future for generations to come.
Max Gilbert is an investment director at Gravis.
Header image: courtesy of Pixabay on Pexels
Several Quill clients were successful at the recent Investment Week 25th Investment Company of the Year Awards 2023, in association with the AIC, at an awards ceremony in London.
The awards recognise managers which have delivered consistently for investors across a variety of sectors.
The shortlists for the awards were constructed using scores provided by the AIC, using Morningstar data. Investment companies needed a three-year track record to 30 June 2023 to be shortlisted and a market cap of £50m or above.
Within each sector, companies had their cumulative fair NAV returns calculated over three discrete periods in sterling terms. Returns over the 12 months to 30 June 2023 were given a 40% weighting, the 12 months to 30 June 2022 were given a 30% weighting, while the 12 months to 30 June 2021 accounted for 20% of the overall score. The final 10% weight was given to the full cumulative NAV return over the three years to 30 June 2023.
These scores were added to give a single score out of 100, the highest of which were considered for the shortlists. Winners were then chosen by a judging panel comprised of IFAs, wealth managers, fund managers and analysts considering qualitative as well as quantitative factors.
Odyssean Investment Trust (OIT) won the UK Smaller Companies award. Alliance Trust (ATST) was the Global award winner and AVI Global Trust (AGT) was highly commended in the Global award category.
Investment Week said: “Against a challenging backdrop, our judges this year were keen to highlight consistent performers who have managed to navigate turbulent market conditions. Discount management was a major focus this year, as well as effective communications with investors and use of the investment company structure.”
Photo: Gregor Stewart, Chairman of Alliance Trust, and Craig Baker, WTW’s Chief Investment Officer, receiving the award
It was confirmed the following day, that the BBC story that Rishi Sunak’s government would be rolling back some of its net zero commitments, including the ban on sales of new petrol and diesel cars being pushed back from the proposed 2030 to 2035, and a delay in phasing out gas boilers, was correct.
The leak and subsequent government announcement of a slowing of the pace to targets, comes on top of what, while the title of this article may seem hyperbolic, is not far from the truth after the summer many have experienced this year. Here in the UK, we were met with the typical British gloomy summer of wind and rain, whilst our European and American counterparts have been met with drastic extremes.
It was recorded that July was the hottest average month on record, with many parts of southern Europe reaching unbearable temperatures of 50 degrees. Accompanying these temperatures were raging wildfires, devastating large areas of Italy, Greece, Croatia, Canada, and Hawaii. These events should be ringing the alarm bells louder than ever on the effect that climate change is having; with the destruction of agriculture, homes, and threatened health of locals, with deteriorating air quality and insufficient infrastructure.
While the effects of climate change are more urgent than ever, it seems that in 2023 ESG funds are now facing the effects of global markets, and ESG may not be at the top of every fund’s lists.
Reuters reported in August that ESG investments have been out of favour with UK investors, with a staggering £1 billion in funding having been pulled since May because of continued interest rate rises and persistent inflation, leading investors to seek more stable grounds for returns.
Figures from global funds network Calastone show that the amount investors sold of their ESG funds snowballed to a total of £1.96 billion by the end of August. This has also been reflected by consumers, with The Telegraph reporting that the ‘number of people making decisions with a ‘’planet first’’ mindset nearly halved from 24pc to 13pc between June 2022 and April this year’.
Once the front runners of global change with the momentum of the Paris Agreement in 2015 behind us, seemingly, under Rishi Sunak’s government, matters of ESG in the UK have taken a back seat. While we need to ensure our own energy supplies in light of the Russian war on Ukraine, the new North Sea oil licenses that Sunak has approved have faced huge backlash from both members of his own party and environmental groups, urging him to look at renewable energy sources – with Sunak claiming that it is “entirely consistent with our plan to get to net zero”.
While Sunak was widely criticised for his move, London Mayor Sadiq Khan hasn’t fared much better at the other end of the spectrum of ESG matters. The controversial ultra low emission zone (ULEZ), aiming to improve the air quality in London, with vehicles not meeting emissions standards being charged £12.50 a day, or a fine, has seen Khan suffer a drop in popularity given that the charges are hitting those who are unable to either pay the charge or afford to get a car that is compliant.
Sunak says the government is still committed to reaching net zero by 2050 but in a “more proportionate way”, however it is increasingly evident that the UK is struggling to find the right balance between the needs of its people and achieving its net zero targets.
Emma Taylor is account executive at Quill PR
Photo by Matt Palmer on Unsplash
As interest rates rise again, those coming off fixed rate mortgages and looking down the barrel of a premium hike of hundreds of pounds and those facing the cost of living ‘heat or eat’ options, must be despairing. With families cutting out essentials, not to mention pension savings or luxuries to fund the cost of living, it is little surprise that financial and health protection insurances will be cut also.
In the six months to January 2023, 13% of adults or 6.2m people who had held insurance or protection policies in May 2022 cancelled at least one of their policies and/or reduced the level of cover on at least one of their policies specifically to save money due to the rising cost of living, according to the Financial Conduct Authority’s Financial Lives Survey. 23% of policies cancelled were life cover, 10% critical illness, 9% private medical insurance (PMI) and 5% health cash plans.
Protection has for ever been regarded as a bit of a luxury item – life insurance just about gets accepted but for income protection, PMI and critical illness insurance – advisers constantly struggle to get the message about the importance of such cover across at the best of times. Or if they do get the message across, persuading clients to take out policies (and pay for the premiums) is another hurdle too few manage to get over.
It shouldn’t take a crisis in the NHS to push the argument for PMI but it should help. But does it? For some, affordability might well be an issue. So, it behoves us to look to company supported PMI. Or to look to the much overlooked (as often considered the poor relation) health cash plans. Significantly cheaper, these still provide cover for many of the health services we all use at some point: dental and optical costs, physiotherapy. Employer sponsored health cash plans are a large chunk of the market, and could be considered a good investment in employee healthcare and maintenance.
Laing Buisson, the independent sector healthcare market data provider agrees that: ‘As we look to the future, the private health cover sector faces two contrasting drivers. On one hand, limited access to NHS dentistry and the growing wait times for NHS treatment continue to fuel the demand for private health cover. On the other hand, the decline in disposable household income, expected to persist into 2024 and beyond, acts as a counter-driver of demand for private health cover.’
Who knows what the answer is, but it calls for individuals and their advisers to find the best way possible to prioritise and secure what protection insurances they can for themselves and to review the level of cover they do have as soon as they are able to adjust to provide meaningful cover in the event of losing income or suffering poor health.
Thankfully providers are seeing the potential from obligations under the FCA’s new Consumer Duty standards to protect consumers and require firms to put customer needs first.
Siobhan Barrow, UK Distribution Director at Royal London said: “Protection insurance can be often overlooked but the Consumer Duty will change this, moving it from a more transactional sale to become a much more integral part of the holistic advice conversation.”
Stephanie Spicer is head of content at Quill PR
Photo by Craig Whitehead on Unsplash