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Brokers must ensure they are prepared for the PPI review

From Richard Angliss

While mortgage regulatory issues are taken seriously and given a great deal of media attention, general insurance and particularly payment protection insurance compliance issues often take second place.

Now that the Financial Services Authority has spelt out its concerns about PPI and announced a large thematic review of this sector, it’s time for advisers who sell MPPI to take urgent action to protect themselves from the possibility of mis-selling this product.

This means that all the points made in the FSA’s press release on January 11 must be covered in every PPI sale and fully documented in case files. These are:

• Making it clear to customers that PPI is optional.

• Giving correct product and price information – explaining eligibility and exclusion issues.

• Recommending a policy that meets customer needs.

• Ensuring that a fair refund on cancellation is included in any recommended product. The only certain way to ensure all of this happens and is documented is to use an effective sales and compliance system.

The Council of Mortgage Lenders has not done the industry any favours by trying to distance MPPI from other forms of PPI and requesting that it be excluded from the Office of Fair Trading’s referral of the sector to the Competition Commission.

The CML is right to be concerned that if consumer confidence in MPPI is undermined sales will decline, leaving more mortgage borrowers vulnerable.

But defending MPPI in this way runs the risk of encouraging complacency about the product at a time when brokers need to improve their compliance performance. FSA enforcement action and fines have already shown that mortgage firms are not above criticism when it comes to PPI sales.

So let’s make sure that we are fit for the FSA’s pending thematic review to minimise the risk of future enforcements and fines.

Richard Angliss
Managing director
Home Buyer Systems
By email

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