The Council of Mortgage Lenders has warned that vulnerable home owners risk losing their homes if the Office of Fair Trading refers mortgage payment protection ins-urance to the Competition Commission.
The OFT has decided to ask the CC to investigate PPI following the Financial Services Authority’s publication of its investigation into the sector, which found major weaknesses.
In its latest News and Views newsletter, the CML opposes the OFT’s decision to include MPPI in the referral because of the important role it plays in its government-sponsored campaign to make home ownership more sustainable. It warns that mortgage borrowers could be deterred from taking out policies to help them through periods of payment difficulty and ensure they are able to remain in their homes.
The CML opposes the referral of MPPI because it says the weaknesses that exist in the PPI sector as a whole are not relevant to mortgage-related policies. For example, the proportion of successful MPPI claims are high at 89% and research suggests that consumers do not take out these policies without shopping around for the best deal first.
Bernard Clarke, author of the CML’s newsletter, says: “We believe that the work we have done on prime MPPI since we launched our su-stainable home ownership initiative in 1999 clearly demonstrates that it is possible to create a credible product with a compliant sales process.”
He adds that the government has supported this initiative and therefore recognises the contribution MPPI makes to that objective.
Although the CML is not predicting a significant worsening of the economic conditions in this country in the foreseeable future, it accepts that conditions will not always be favourable and MPPI can help ensure home ownership remains sustainable in all market conditions.
Clarke warns: “If home owners are deterred from taking out MPPI policies some of them may be at greater risk of losing their homes, which is bad news for consumers, lenders and the government.”