Payment protection insurance, the product designed to protect borrowers from financial hardship, has been the subject of increasingly hostile media coverage and criticism from consumer groups for being over-priced, poor value, opaque and of marginal benefit.One major problem is that brokers, who place some 60% to 70% of new mortgage business, are only responsible for 25% of all MPPI sales at most – even though they have access to better products than lenders in terms of pricing and cover. If MPPI should underpin your clients’ financial health, market penetration is woefully low and mortgage brokers’ contribution is much less than it should be. Perhaps the sales process is not cost-effective and too time consuming, or maybe there is widespread concern about the products’ negative image. Maybe it’s easier to pass in favour of lenders’ inhouse products. But if those products are inferior to those available on the open market, how does that fit with general insurance regulations and best advice? There is concern among brokers that they operate in a best advice minefield, being far more exposed to mis-selling claims than banks and white label operations that enjoy information-only status and a less intrusive regulatory regime. Such concerns may be mere perceptions but there is real substance to the charge that when it comes to selling MPPI, it is not a level playing field. This, no doubt, is a significant factor in brokers’ seeming reluctance to sell the product. As a broker, you should at least make your clients aware of the problems they could face without protection. Christmas is a time of giving. Make sure your clients are on the receiving end of some good advice.
- Top trends
A recent report from Unilever paints a picture of the singleton society we seem to be becoming. With predictions including one-third of all households will consist of one person by 2021, it seems more and more people are choosing to live alone.
Students are optimistic about their chances of getting on the housing ladder, Scottish Widows Bank’s 2005 graduate survey reveals. The survey shows that while an underlying gloom still hangs about the prospects of buying a property the overall pessimism rate is down, with graduates exploring different ways of buying properties. Some 60% of graduates say […]
The Financial Services Authoritys mystery shopping exercise into the selling of payment protection insurance has revealed a massive gulf between how the product is supposed to be sold and how it is sold in practice.Firms involved with the selling of PPI will be receiving detailed feedback on the findings and will be required to address […]
Brokers are calling for direct access to clients’ credit reports to help them recommend suitable lenders and products. One broker tells Mortgage Strategy: “Many clients don’t know their credit details, so access to reports would help brokers find the most suitable lender and products. “Though brokers can apply to access information via the client, this […]
Dental, optical care and physiotherapy are the most popular health cash plan benefits across the UK, according to a recent survey of Health Shield members.
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