FSA plays down MPPI fears

The Financial Services Authority has reassured brokers that their mortgage payment protection insurance fears are unwarranted as long as their product advice is in line with its rules.

Last week, brokers asked the regulator to look at ways to help restore their confidence in MPPI.

In recent months, fears have grown about the negative impact regulatory actions taken by the FSA and the Office of Fair Trading on MPPI are having on the broker community, with a resulting drop in sales.

This includes the OFT’s referral of payment protection insurance and MPPI to the Competition Commission as well as fines for MPPI mis-selling.

Brokers fear that consumers are being increasingly exposed to greater financial risks due to MPPI not being offered to home buyers.

But the FSA has reassured brokers that they have nothing to fear as long as they abide by its rules.

A spokesman for the FSA says: “If brokers follow our rules they shouldn’t have a problem. Mortgage or insurance brokers can properly and safely offer MPPI as long as it is done in accordance with our regulations.”

But Thomas Reeh, chief executive of blackandwhite.co.uk, believes that the FSA should do more for the broker community and give more advice when it comes to best practice MPPI sales processes.

He says that in an environment where individual involuntary arrangements and repossessions are sky-high, MPPI is vital to protect consumers.

He adds: “Treating Customers Fairly is about protecting consumers’ interests and leaving their mortgage payments exposed is a big risk.”

Andy Pratt, chief executive of Alexander Hall, agrees that the regulator needs to do more to assist in this situation, saying that many brokers are not even offering MPPI whereas in fact it should be mandatory.

He says: “We need to ensure that clients are being made aware that MPPI is available.”