The Building Societies Association has written a letter to the Office of Fair Trading criticising its investigation into payment protection insurance as a potential threat to home owners.
In October, the Financial Services Authority and the OFT released two damning reports on the mis-selling of PPI, with recommendations that both PPI and mortgage payment protection insurance be transferred to the Competition Commission.
The proposed referral has sparked criticism that MPPI plays an important role in the mortgage market and concern that it could put borrowers off from taking out policies.
The BSA’s letter expresses concern that there is a danger that MPPI will be tarnished by negative publicity that is received by general PPI products.
A spokesperson for the BSA says: “As the OFT noted in its investigation, this is despite MPPI being distributed and sold differently to general PPI. We are concerned that as a consequence of this, people will be reluctant to take out MPPI.”
Both the Assocation of Mortgage Intermediaries and the Council of Mortgage Lenders are working on a formal response to the proposals, before the consultation period closes on November 30.
Rob Giffiths, associate director at AMI, says: “MPPI is a product with merit and can provide customers with important protection. In our response we will be highlighting the important role of brokers in the MPPI market.
“Most brokers would not sell the PPI at the mortgage point-of-sale highlighting that they are not insisting it is a ‘must have’ with a mortgage.”
Griffiths adds that its response will also refer to the OFT’s use of anecdotal evidence instead of hard data.
Stephen Atkins, managing director of Freedom Finance, says: “The OFT has painted the PPI sector with a broad brush and put all the types of products under one roof, which is fair as most mortgage brokers do a good job advising on related insurance policies.”