Broker warns borrowers should beware bogus sales information
MORTGAGE SOLUTIONS - 14TH FEBRUARY 2005
Borrowers are at risk from lenders selling expensive and often useless personal loan insurance, according to intermediary firm Burgesses.
The broker asserted that lenders used misleading sales techniques to offer front loaded loan protection cover against unemployment, disability and death. Burgesses found that many lenders automatically include insurance cover in the loan quote and did not check for pre-existing conditions medical conditions that could affect the cover.
Simon Burgess, managing director of Burgesses, said; “It is not that we mind lenders making a profit – that is what they are there to do. What we object to is the profiteering of customers, who are often the most vulnerable, and selling them cover that is all too often useless.”
Burgess highlighted a section on the Financial Ombudsman Service website addressing these concerns. The FOS stated that complaints had been made by policyholders who had been sold unsuitable policies. It warned that this type of insurance was often sold by non-specials and added that the seller must ask enough questions to properly determine borrower suitability.
David Holbrook, managing director of Hallmark-IFA said. “The whole industry should not be painted with one brush, some lenders are good and some bad, just as brokers are. However, borrowers must look behind the headline rate to understand the product they are acquiring.”
