Help protect borrowers from being repossessed
Share
STAR LETTER
The Financial Services Authority recently declared that lenders must not apply a monthly charge where a repayment agreement for arrears is already in place.
In addition, any payments made by customers must first be allocated to clearing missed monthly payments rather than to arrears charges. The regulator reiterated that repossessions should always be the last resort.
But I would argue that this is disguising the true problem and that these new rules for lenders will do little to protect struggling home owners.
Lenders have always been urged to use repossession as a last resort. Other moves such as clearing missed payments first are simply distractions.
We are working to develop a product that will provide wider cover and meet more customers’ expectations - it should work well for brokers
We need to guard against people being confronted with repossession in the first place.
Home owners must be persuaded to make their own provision through insurance to guard against repossession should they no longer be able to keep up repayments.
With predictions of around 600,000 public sector and 700,000 private sector job losses, brokers have a duty to ensure clients know the risks of not having adequate protection in place.
Cover doesn’t have to be tied to the mortgage. If clients are put off by the perceived lack of flexibility that mortgage payment protection insurance provides, a short-term income insurance product can provide cover for a while.
We are working with our underwriters on a product that will provide wider cover and meet more customers’ expectations. This should work well for brokers, who can earn commission on general insurance sales.
TIM JOHNSON
CHIEF EXECUTIVE
PAYMENTSHIELD
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
