Regulation could spell end of mortgage payment protection insurance
MORTGAGE STRATEGY - 8TH JULY 2002
Mortgage payment protection insurance could be struck off intermediary sales lists after general insurance advice becomes regulated, an industry forum has warned.
The Creditor Regulatory Forum says that some distributors will stop offering loan payment protection insurance rather than foot the bill for compliant sales.
Steve Devine, director of corporate communications for Pinnacle Insurance and spokesman for the CRF, says: “If these people are asked to take on the costs of training and compliance for add-on products like creditor, they might just not go there. The question is, how many current distributors will decide not to carry on?”
The CRF believes fewer distributors could lead to more exposed borrowers.
But other experts say mortgage brokers dump mortgage payment protection insurance at their peril and must continue to mention creditor even if they don’t make insurance sales.
Simon Burgess, managing director of payment protection insurance specialist broker Burgesses says: “There is a duty to ensure clients have sufficient funds to meet mortgage payments and a number of legal precedents where advisers had to pay up because they’ve failed to advise on mortgage payment protection insurance.”
A new system of regulation for Britain’s 700 credit unions operated by the Financial Services Authority came into effect last week, under which members will be given similar protection to bank customers.
