The Loaded Premium Scandal How a Quarter of the UK Protection Market Is Silently Overcharging Customers

Two commission models - one honest, one not

There is a critical distinction in the UK protection insurance market that most customers will never hear about, because nobody in the distribution chain has any incentive to explain it to them. It is the distinction between enhanced commission and loaded premiums. Understanding the difference is essential, because one of these models works in the customer’s interest and the other works directly against it.

The first model, enhanced commission is straightforward and, frankly, legitimate. Large mortgage clubs such as TMA and Paradigm distribute enormous volumes of protection business. Because they place thousands of policies per year with each insurer, they have the commercial leverage to negotiate enhanced commission rates for their member firms. An insurer might pay a standard indemnity commission of 200% of the annualised premium index (API) to a small directly authorised firm but offer 250% API through a major mortgage club. The critical point is this: the customer’s premium does not change. The insurer absorbs the higher commission cost because the volume of business justifies a lower margin per policy. The customer pays the same premium they would have paid anywhere else. The adviser earns more. The insurer writes more volume. Nobody loses.

The second model, loaded premiums, is an entirely different proposition. Here, the intermediary demands a higher commission from the insurer, but instead of the insurer absorbing the cost through volume efficiencies, the insurer passes the cost directly to the customer by inflating their premium. The customer ends up paying 20 to 25 per cent more for exactly the same cover. The additional premium does not buy them better terms, broader definitions, enhanced claims service, or anything else of value. It buys the intermediary a fatter commission cheque.

Let that distinction settle for a moment. In the first model, the intermediary earns more because it delivers volume and the insurer accepts a lower margin. In the second model, the intermediary earns more because the customer is charged more. The first is a commercial negotiation between two businesses. The second is a hidden tax on the consumer.

Who is doing this and how widespread is it

According to the FCA’s own interim report from its pure protection market study (MS24/1.4), published in January 2026, approximately 26 per cent of all intermediated new protection sales in 2024 involved loaded premiums. One in four policies. That is not fringe practice. That is a structural feature of the UK protection market.

The mechanism operates primarily through restricted panels. Certain networks and distribution firms negotiate commission arrangements with a limited panel of four to six insurers. They demand commission rates significantly above the standard market rate. To fund these inflated commissions, the insurer loads the customer’s premium. If an insurer refuses to meet the commission demands, it is excluded from the panel and with it, access to the entire adviser base that distribution firm controls.

Oxilium is one such firm operating in this space. Customers purchasing protection through advisers aligned with clubs and networks that load premiums are systematically paying more than customers who go to a firm that does not. Yet neither the customer, nor in some cases even the individual adviser, is told that the premium includes a loading.

The Protection Distributors Group, which represents independent protection distributors, has been unequivocal on this point. They have publicly stated that insurers loading premiums to pay selected networks and distributors higher commissions need to be investigated. Industry practitioners have been equally blunt. Rob Peters of Simple Fast Mortgage has described loaded premiums as hard to justify ethically. Daniel Hobbs of New Leaf Distribution has called it ridiculous. Hannah Bashford of Model Financial Solutions has said the practice gives the industry a bad name and destroys consumer trust.

Meanwhile, networks like Cityplus have taken the opposite approach, marketing themselves explicitly on the basis that they do not load premiums. The fact that a network considers ‘no loaded premiums’ to be a competitive differentiator tells you everything you need to know about how widespread the practice is among those who do.

The uncomfortable truth is that the largest networks and clubs using loaded premiums have been notably silent since the FCA launched its market study. No major insurer or network using the practice has made a public statement defending it. That silence is telling.

Naming names: who loads and who does not

The industry treats this as an open secret. Everyone inside the distribution chain knows which firms load premiums and which do not. But nobody publishes a list, because the firms that load are enormous distribution powerhouses and the insurers on their panels do not want to lose the volume. The FCA has the data, it knows exactly which firms account for that 26 per cent but has not yet published firm-level findings. So let us do what we can with public sources and industry intelligence.

Firms confirmed or strongly indicated to use loaded premiums

Oxilium operates in the club and distribution space where premium loading is the mechanism for enhanced commission. Customers purchasing protection through advisers aligned with Oxilium are paying inflated premiums to fund intermediary commissions above the standard rate.

Owl Financial, which is a trading style of The Openwork Partnership, is one of the UK’s largest financial services networks with over 4,300 advisers. Openwork operates a restricted panel of eight protection providers: Aviva, Guardian, Legal and General, LV=, Royal London, The Exeter, Vitality, and Zurich. The IFoA’s analysis of the FCA market study specifically identifies restricted panels as the primary mechanism through which premiums are loaded. Openwork is one of the largest restricted panel operators in the UK protection market. Owl’s self-employed adviser model, where advisers are incentivised through commission structures, fits the profile of firms operating loaded premiums. It is worth noting that the FCA’s own data confirms that commission rates are, on average, higher for policies sold through restricted panel arrangements than for those sold through whole-of-market panels.

Beyond these, the FCA’s interim report makes clear that 26 per cent of all intermediated protection sales involved loaded premiums in 2024, and those loaded policies carried approximately 25 per cent higher commission rates. The practice is concentrated in networks operating restricted panels — typically four to six insurers — where the network demands enhanced commission and the insurer loads the customer’s premium to fund it. Other major restricted panel networks including Sesame Bankhall Group (which encompasses Sesame Network, Bankhall, and PMS Mortgage Club), Quilter Financial Planning, and Primis (part of LSL Property Services, which also absorbed TenetLime) all operate restricted or limited panels for protection. Whether they specifically load premiums rather than negotiating enhanced commission absorbed by the insurer is not publicly confirmed by any of them. Crucially, none of them have publicly denied it either. As industry commentators have noted, no big insurer or network using the practice of loaded premiums and enhanced commissions has made a public statement on the matter since the FCA launched its market study.

The Financial Services Consumer Panel, the statutory body representing consumers, has been unambiguous. In its annual report it stated that loaded premiums are being used to generate commissions contrary to the consumer interest and do not offer fair value. Combined with inflation and the ongoing cost of living, the panel concluded, consumers are facing harm which is not in line with the principles under the Consumer Duty.

Firms confirmed to NOT use loaded premiums

Paradigm is explicit. On its website it states: ‘We do not, and never have, offered loaded premiums.’ Paradigm operates one of the UK’s leading mortgage clubs and protection propositions, with over 1,000 firms benefiting from its commercial terms, all without loading a penny onto the customer’s premium.

TMA Club, one of the largest mortgage clubs in the UK, negotiates enhanced commission rates for its member firms through volume. A TMA-affiliated adviser might earn 250 per cent API instead of the standard 200 per cent API, but the customer’s premium does not change. The insurer absorbs the cost because the volume justifies a lower margin per policy. This is the legitimate model.

Cityplus Network markets itself explicitly on the basis that it is ‘a firm believer in no loaded premiums for protection.’ The Right Mortgage and Protection Network similarly advertises ‘fair value with unloaded premiums’ as a core feature of its proposition. LifeSearch, one of the UK’s largest specialist protection intermediaries, has publicly positioned itself against loaded premiums in industry commentary. The Protection Distributors Group, which represents independent protection distributors, has called for investigation of the practice and has publicly stated that insurers loading premiums to pay selected networks higher commissions need to be investigated.

The contrast is instructive. The firms that do not load premiums are willing to say so publicly, loudly, and repeatedly. They treat it as a point of competitive distinction. The firms that do load premiums say nothing at all. That asymmetry tells you everything you need to know about which side of this argument can withstand daylight.

The Maths: what this costs a real customer

The industry prefers to keep this conversation theoretical. So let us do something the industry would rather we did not and put actual numbers on it.

Consider a typical customer who has just purchased a home and arranges a protection package through their mortgage adviser. The package is standard: level term life insurance, critical illness cover, and decreasing term mortgage protection. The policies run for 25 years to match the mortgage. Through a firm operating loaded premiums, the combined monthly premium comes to £110.

Now consider what that same customer would pay through an adviser whose firm does not load premiums. The difference is not subtle. Because the loading typically adds 20 to 25 per cent to the premium, the non-loaded premium for the same cover would be somewhere between £82.50 and £88 per month.

Here is what that difference looks like over the full 25-year policy term:

At the 20 per cent loading level, the customer overpays by £6,600. At 25 per cent, the overpayment reaches £8,250. The midpoint £7,425 is the most probable excess cost for a single customer buying a single set of protection policies alongside a single mortgage.

Break that down year by year and it becomes even more visceral. At 20 per cent loading, the customer is paying £264 per year more than they need to. At 25 per cent, it is £330 per year. Every year. For a quarter of a century. That money does not improve their cover. It does not reduce their excess. It does not speed up their claims process. It goes straight into the intermediary’s commission account.

Now think about what else a customer could do with £8,250 over 25 years. That is a family holiday every two years. That is a meaningful contribution to a child’s university fund. That is three years of home insurance premiums. It is real money, taken from real people, for no reason other than the intermediary’s commercial preference.

Scaling the harm

The FCA reports that approximately 80 per cent of protection policies are sold through intermediaries, and 26 per cent of those intermediated sales involve loaded premiums. In 2024, around 1.3 million new protection policies were sold in the UK. That means roughly 270,000 policies per year are sold with loaded premiums. If the average excess cost per policy is even half of the £7,425 figure calculated above — say £3,700, accounting for shorter policy terms and lower premiums — the aggregate annual consumer detriment exceeds £1 billion over the lifetime of those policies. Every single year, another £1 billion of excess cost is loaded onto UK consumers buying protection insurance.

This is not a rounding error. This is an industry-scale extraction from customers who do not know it is happening.

The ‘Value of Advice’ Excuse

The defence is always the same. Advisers and their networks say the customer is receiving a superior service. They say the loaded premium reflects the cost of providing advice, training, compliance oversight, and ongoing support. They say the customer is happy to pay it.

This argument is dishonest on multiple levels.

First, the customer does not know they are paying it. You cannot claim a customer is happy to pay a surcharge they have never been told about. The loading is not disclosed at the point of sale. It is not itemised on the policy schedule. The customer sees a premium, assumes it is the market rate, and pays it. That is not informed consent. That is ignorance being exploited.

Second, the argument implies that firms which do not load premiums are somehow providing an inferior service. This is demonstrably false. There are thousands of FCA-authorised advisory firms across the UK that deliver rigorous, compliant, customer-focused protection advice without loading a single penny onto the customer’s premium. These firms earn standard commission — or, in the case of those affiliated with large clubs like TMA or Paradigm, earn enhanced commission negotiated through volume. Either way, the customer pays the same premium they would pay going direct. The service is not inferior. Compliance is not weaker. The advice is not less thorough. The only difference is that the adviser is not extracting a hidden surcharge from the customer.

Third, the standard commission structure already remunerates the adviser for the work of advising and placing the policy. Indemnity commission at 200 per cent of API means the adviser receives an upfront payment equivalent to two years’ worth of the customer’s annual premium. That is not trivial. That is a significant payment for what is typically a process that takes a few hours. If an adviser cannot sustain a viable business on 200 per cent API — or even 250 per cent API through a volume-based mortgage club arrangement — the problem is their cost base, not the customer’s premium.

The ‘value of advice’ defence is a fig leaf. It exists because the industry needs a story that sounds reasonable when challenged. But it does not withstand scrutiny. The customer could walk down the road to an adviser at a non-loading firm and receive the same quality of advice for 20 to 25 per cent less. That is the beginning and the end of the argument.

Insurers are not innocent bystanders

There is a temptation to frame this as purely an intermediary problem. It is not. Insurers are willing, knowing, active participants.

When a network demands a higher commission and the insurer agrees to load the customer’s premium to fund it, the insurer is making a conscious commercial decision to overcharge the customer in exchange for distribution access. The insurer knows the loading is happening. The insurer designs the pricing structure that enables it. The insurer signs the commission agreement. The insurer processes the inflated premium every month for 25 years.

Under PROD 4, insurers as product manufacturers have an ongoing obligation to ensure their products deliver fair value throughout the distribution chain. This is not optional. It is a regulatory requirement. If an insurer knows that its product is being sold at a 25 per cent markup through a specific distribution channel and it does know, because it is the one applying the markup then it has a duty to assess whether that product still represents fair value for the customer. A product that costs £110 per month through one channel and £82.50 through another, with identical terms and cover, does not represent fair value in the loaded channel. It cannot. The £27.50 per month difference is paying for nothing the customer receives.

Insurers must not promote, facilitate, or stand behind intermediary firms that operate loaded premiums. Any insurer that agrees to load premiums to secure distribution is putting commercial volume ahead of customer outcomes. That is the opposite of what the Consumer Duty requires. It is the opposite of what PROD 4 mandates. And the regulator should be asking every major protection insurer in the UK — Legal and General, Aviva, Royal London, Scottish Widows, Vitality, The Exeter, and every other firm writing intermediated protection business — a direct question: do you apply premium loadings at the request of any intermediary network, mortgage club, or distributor? If yes, explain how that is consistent with your obligations as a product manufacturer.

The regulator is looking at this problem and blinking

The FCA deserves credit for launching its pure protection market study and for explicitly naming loaded premiums as an area of concern. But credit for asking the question is not the same as credit for answering it correctly.

The interim report, published in January 2026, found that loaded premiums affected 26 per cent of intermediated new sales in 2024. It then concluded that, on average, loaded premiums were within a similar range to non-loaded premiums. On the basis of this average comparison, the FCA did not propose banning or restricting the practice.

This finding is deeply problematic, and the methodology behind it needs to be challenged.

Averaging across loaded and non-loaded channels tells you nothing about the individual customer experience within the loaded channel. The relevant question is not whether the average customer across the entire market is harmed. The relevant question is whether every customer who buys through a loaded channel pays more than they would have paid through a non-loaded channel for the same or comparable cover. The answer to that question is yes. By definition. That is what a loaded premium is. The loading is the harm. Averaging it away does not make it disappear.

Consider an analogy. If a supermarket chain operates 100 stores, 74 of which charge £1 for a loaf of bread and 26 of which charge £1.25 for the identical product, the average price across all stores is £1.065. A regulator looking at the average might conclude there is no significant pricing harm. But every customer walking into one of the 26 stores paying £1.25 is being overcharged. The harm is real. It is just hidden inside the average.

The FCA is kindly requested to reconsider its approach. This is not right for the customer. A practice that adds 20 to 25 per cent to the cost of protection insurance for over a quarter of all intermediated sales, without disclosure, without customer consent, and without any corresponding improvement in the product, cannot be consistent with the Consumer Duty. The FCA’s own stated objective is to promote effective competition in the interests of consumers. Loaded premiums are the antithesis of that objective.

The final report is expected in Q3 2026. It must go further than the interim findings. Specifically, the regulator should mandate premium loading disclosure at the point of sale, require insurers to demonstrate PROD 4 compliance on a distributor-by-distributor basis, investigate the restricted panel mechanism under its competition powers, and consider whether a ban on premium loading as distinct from commission negotiation, is the appropriate remedy.

Customers should complain and here is why

If you have purchased life insurance, critical illness cover, income protection, or mortgage protection through a mortgage adviser in the UK, there is roughly a one-in-four chance that your premium includes a hidden loading. You were not told about it. You did not agree to it. But you have been paying for it every month since the policy started.

The fact that there are not already thousands of complaints about this to the Financial Ombudsman Service is a function of the disclosure failure, not a sign that the practice is acceptable. Customers do not complain because they do not know. They assume their premium is the market rate. They trust their adviser. They never discover that an adviser at a non-loading firm down the road could have arranged the same cover for £22 to £27.50 less per month.

This is not in the best interest of the customer. It cannot be dressed up as being in the best interest of the customer. And the absence of complaints does not validate the practice, it indicts the disclosure regime that allows it to continue undetected.

Any customer who suspects their premium may be loaded should ask their adviser a direct question: does my premium include any loading above the insurer’s standard rate? If the answer is yes, or if the adviser cannot give a straight answer, the customer should obtain a comparison quote from a directly authorised firm or a club that does not load premiums. If the comparison quote is materially cheaper for the same cover, the customer has grounds for a formal complaint. If the complaint is not resolved, it should go to the Financial Ombudsman Service.

The numbers speak for themselves. Over a 25-year term on a £110 per month combined protection package, a customer on loaded premiums will pay between £6,600 and £8,250 more than a customer at a non-loading firm. That is not a minor discrepancy. That is a disastrous outcome for the customer. It is a scandal hiding in plain sight. And it is time, past time for it to end.

This article represents the views of the author. It is intended to stimulate discussion and regulatory scrutiny of a practice that, in the author’s assessment, causes material and systematic financial harm to UK consumers. The figures used are illustrative but based on the structural pricing differentials that exist between loaded and non-loaded distribution channels in the UK protection market. The FCA’s pure protection market study final report is expected in Q3 2026. The feedback window on the interim report closes 31 March 2026.

About the Author

Tanjir Sugar is the CEO of Mortgage Magic™ and Finance Magic™, an FCA-regulated UK fintech platform built around one idea: giving consumers genuine control over their financial lives, without the hidden costs and conflicts of interest that have become structural features of the intermediated market.

Finance Magic offers free credit reports through integrations with TransUnion and Experian, whole-of-market comparisons across mortgages, life insurance, income protection, critical illness cover, loans, and credit cards, and a single platform where customers can track applications, communicate with advisers, and manage financial documents securely.

Tanjir writes and speaks on regulatory transparency, consumer protection, and the structural distortions that sit inside UK financial services distribution.

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