Treasury select committee member Andy Love says amending the MMR so that protection products are discussed when someone takes out a mortgage could help close the protection gap.
Speaking in a Westminster Hall debate last week, Love (pictured) said the protection market has collapsed in the wake of missold payment protection insurance and the Government should take action in order to address the resulting “protection gap”.
He cited research by Cuna Mutual which found that 95 per cent of mortgages are sold without protection. Some brokers discuss protection needs as part of the fact-find but there is no requirement to do so.
Love said: “With regard to the MMR, which sets the terms of the discussion between the customer and the lending institution, I am not aware that within the comprehensive discussion that is now required, any room is given to insurance products to protect the loan.
“I would have thought that was one way in which the regulator could ensure that it is brought to the customer’s attention that they should get a protection policy, so that if things go wrong they can rest assured their loan will be insured.”