Mortgage Payment Protection Insurance News Articles
 

Brokers flouting code of conduct, Insurer finds brokers including MPPI without asking and refusing to send out information.
An Internet-based insurer has accused mortgage lenders of breaking the ABIs code of conduct on the sale of mortgage payment protection insurance.
Staff from online insurer Protection Insurance posed as customers and made 100 calls to the top 10 mortgage lenders. They asked for mortgage quotes, but did not complete any transactions.
They found that some lenders automatically included MPPI in the quotes without being asked. Others refused to send out policy documents or to give a simple explanation of what was covered. Callers were not asked about their medical history and contrary to the ABIs code of conduct were not informed that pre-existing medical conditions were not covered. In two thirds of calls, lenders did not ask for employment details.
The employment status of the insured is often a large source of problems when MPPI claims are made. Part-time and contract workers, for example, may not be eligible for cover.
As well as flagging up its concerns over possible abuses of the sale of MPPI, Protection Insurance has taken the opportunity to highlight its highly competitive premiums. It calculates that the average MPPI premium for each £ 100 of cover for the top 10 lenders is £ 5.78. Protection Insurances equivalent figure is £ 3.95.
Protection-Insurance.com suggested that simply paying higher premiums did not guarantee a consumer better cover. They said that in most cases it meant more commission for the lender.
It was suggested that with MPPI premiums of more than £ 3bn a year and commission levels of up to 70 per cent it was easy to see why it might be sold at all costs.
However, mortgage lenders were sceptical of the findings. "Our mortgage advisers would explain MPPI and discuss whether people wanted to take it," said Sherrie Rowlands of Nationwide. "We are a responsible lender."
Jo Gill, senior media relations officer for Halifax, agreed. "Were confident we have a good record in this area and that we give customers all the information they need to make the right decision."
Sue Anderson, head of external affairs for the Council of Mortgage Lenders was also sceptical. "Its findings are not in line with the feedback we have," she said.
"These sound like they were pretty much initial inquiries. I have no doubt whatsoever that in the course of a proper mortgage application the nature of the insurance would be made clear to consumers. It would be helpful to know what stage in the process these calls got to."