Protection news
23
FSA and firms reach
Sandy McPherson,
head of marketing at
Paymentshield, looks at
agreement on MPPI
protecting us from
ourselves
Anyone with designs to become
The Financial Services Authority
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remainder of this year; and hard and when people are more
part of the property-owning
(FSA) and Mortgage Payment amend MPPI contracts to ensure likely to try to claim on it.
democracy is soon going to be
Protection Insurance (MPPI) firms that all customers are made “We note that this agreement is
protected from themselves by
have agreed an industry-wide pack- aware of the circumstances in to freeze premiums and cover for
bankers burrowing into their
age of measures for consumers, existing customers until at least
finances to ascertain their
which firms have the right to
ability to meet the repayments.
including refunds of around £60 vary premiums and cover. January 2010. We will be watching
Not that the lenders necessarily
million. Jon Pain, managing director of to see how the FSA ensures MPPI
want to assume the position of
The industry has acted in supervision at the FSA, said: "The customers continue to get a fair
nosey-parker-in-chief, but new
response to FSA concerns over FSA welcomes this positive move by deal beyond this date. Significant
government-backed proposals
recent increases in premiums and MPPI firms to reverse recent changes to cover go against the
could soon make this a reality.
reductions in what customers are changes in premiums or cover whole principle of why people pay
For the past decade the
covered for under their policy. The which will put affected customers for insurance and undermine con-
government has heaped praise
FSA's concerns centred on the back in the position they were in sumers' trust in the industry."
on the City in all its guises. Now
terms permitting these changes, and before the policy was changed. It Which? personal finance cam-
they have rounded on ‘reckless
how clearly they were disclosed. will also give all MPPI customers paigner, Lucy Widenka, added:
lending practices’ that have
The FSA expects its concerns to be clarity about when and why firms "We're pleased that the FSA has
placed families in a precarious
addressed by the agreement will be able to vary these in future. taken action against firms who've
financial position. Self cert
reached. "This clarity will provide the effectively been selling people
mortgages also look set to be
Following discussions initiated basis for MPPI to remain a valuable umbrellas then trying to take them
scrapped. This could effectively
by the FSA with relevant trade bod- option for many mortgage cus- away at the first sign of rain.
disbar from obtaining a
ies and some firms, the industry has tomers who wish to take out pro- "Customers must be refunded as
mortgage many of those people
r
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esponded positively by agreeing to: tection, alongside the mortgage quickly as possible, as many could
that have recently lost their jobs
proactively refund increases in commitment they are taking on." be in financial difficulty as a result and decided to go self-
premiums, and reverse any Firms will contact customers if of their cover being reduced. What's employed. They won’t be able to
reductions in cover, for cus- their policy is affected, and will more, offending firms must be file three years’ accounts, so
tomers who have experienced make all refunds by the end of June named to make MPPI policyholders how else will they qualify for a
these changes to their policy in 2010. aware that this could affect them. mortgage?
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2009; Adam Phillips, Chairman of the "The fact remains that MPPI is We are in danger of regulating
offer to reinstate policies where a Financial Services Consumer Panel, not a great product - just 28% of
away the opportunity for many
customer had cancelled it within said: "This is exactly what a finan- premiums collected are paid out in
in our society to own the house
two months of an increase in cial regulator should be here for claims - so we'd urge consumers to
they live in – and the prospect
premium or reduction in cover and we applaud the FSA's action. It shop around for a product that best
of them benefiting from its
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made during 2009; cannot be right that firms change suits their needs, or consider an
long-term increase in equity.
freeze premiums and cover for the terms and conditions of an
alternative to MPPI to protect their
Naturally the industry would
existing customers for at least the insurance policy just as times get finances as a whole."
prefer that everyone granted a
mortgage can afford to keep up
the payments over time, but
sometimes the unexpected
ScotProv guide to unemployment cover
happens that makes this
difficult, if not impossible. But
while the government has in-
As unemployment figures reach letters which IFAs can use to help The response to this has been a
built insurance in the form of
2.47 million, Scottish Provident promote Unemployment Benefit steady withdrawal of stand alone
taxpayers’ cash to see the
has launched a step-by-step guide to their customers, along with a policies by many companies, and nation through the bad times,
for IFAs, outlining the best ways client-facing booklet which IFAs a steady decline of combined poli- ordinary families are struggling.
to communicate the need for can give to their clients to allow cies. It's important for the indus- The government should insist
Unemployment Benefit to their them to read for themselves about try to work with advisers and con- that anyone taking out a
clients. the value of this important cover. sumers to come up with a solu- mortgage has cover in place to
Its guidance campaign outlines Susan Barclay, head of market- tion that fits these turbulent keep the roof over their heads
areas such as understanding the ing, said: "With over 2.47 million times." in testing times. Insisting that
detail of Unemployment Benefit, people in the UK now unem- IFAs wanting more information each homeowner has mortgage
eligibility criteria and gives some ployed, a figure which has risen on the Scottish Provident payment protection insurance
simple guidance on the claiming dramatically in light of the global Unemployment Benefit campaign
(MPPI) must also be a cheaper
process. recession and is likely to continue should speak to their sales con-
and more effective alternative
The campaign will also offer to rise, this has become a really sultant or call Salesline on 0845
than the Homeowners
some FAQs and sample approach important part of our industry. 300 0005 (opt 2).
Mortgage Support Scheme.
www.mortgageintroducer.com November 2009 Mortgage Introducer
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