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The industry needs to hear the truth if we are to stop sales of MPPI falling

From Thomas Reeh

I don’t know which is more disappointing, yet another ho-hum attack by Simon Burgess on single premium payment protection insurance (Mortgage Strategy January 8) or the fact that Mortgage Strategy doesn’t validate what goes to print is accurate. Let’s revisit some of Burgess’ ‘facts’.

l Single premium PPI is pushed onto unsuspecting borrowers.

What rubbish. Does Burgess even know what’s involved in writing a mortgage with an MPPI policy? It’s disclosure upon disclosure. Has he ever written a mortgage?

l Brokers supplement their pensions with the huge commissions attached to this cover.

Nice one. Based on what evidence? And the 750,000 holiday home and convertible Bentley is the image us greedy mortgage brokers all want to portray? Right.

l It’s not uncommon for lenders to take 80% of a client’s premium in commission.

I can only speak for blackandwhite.co.uk but this number has been overstated by about 120%.

l The vast majority of single premium MPPI policies have been mis-sold.

Based on what evidence? The complaint levels relating to this product according to the Financial Ombudsman Service are fractions of 1%.

l When MPPI is sold within a mortgage it costs a customer money in interest.

True. But with sub-prime clients who have a history of their direct debit mandates being cancelled by banks, why would a monthly policy be deemed treating customers fairly in the eyes of the Financial Services Authority?

I draw Burgess’ attention to ICOB 4 & 5 and the Statement of Price that is required to be issued with every contract. Moreover does Burgess’ company even offer single premium as choice if a consumer wanted to buy it?

l Unlike a monthly premium, borrowers cannot cancel if a better deal comes along.

Another falsehood, as far as we are concerned. The Assurant policy we sell can be cancelled by clients at any time with a full pro rata refund.

Come on Mortgage Strategy, MPPI sale rates are in free fall and that is bad news. With consumer credit debt spiralling out of control and 30,000 IVAs in the last quarter alone it’s not healthy that fewer than one in four mortgage customers are covered by suitable MPPI policies. It’s this sort of press that does the industry and ultimately consumers no good.

Thomas Reeh
Chief executive officer
Blackandwhite.co.uk
By email

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