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I am not the person who is damaging the reputation of PPI and harming consumers

From Simon Burgess

I’m delighted to be able to respond to your recent star letter from Thomas Reeh (Mortgage Strategy January 15). I’m not sure what he gets the star for, as it certainly isn’t for having a broad understanding of what’s happening around him.

He gives the impression of being an authority on payment protection insurance although he isn’t able to refer to any independent research, consumer group feedback, trade association activity or even Office of Fair Trading findings – all fundamental to the PPI argument.

Normally, if people want to get their point across they use third party endorsements to support their view but since Reeh hasn’t got a shred of evidence, he would be hard-pressed to do this. It’s no wonder he says: “I can only speak for blackandwhite.co.uk.”

Rather than lower myself to his level and respond to personal insults, I will address the issues raised.

l He rubbished my view that single premium PPI is pushed onto unsuspecting borrowers. He must also therefore rubbish the Financial Services Authority’s feedback. The regulator has highlighted single premium policies as a key area of concern stating that “with single premium policies there is a bias, even if the product is not suitable”. The OFT also finds poor information is available regarding prices and product details – evidence that single premium PPI is pushed onto unsuspecting borrowers.

In its February 2006 report into the PPI market, Defaqto stated that “single premium policies are expensive and act to prevent easy comparisons between products” and the British Insurance Brokers’ Association has called for single premium policies to be outlawed. Eric Galbraith, chief executive of BIBA, says: “This is not an insurance problem and there’s nothing wrong with PPI itself. The worst abuse of this product has been at the hands of the lenders who sell PPI.”

l Reeh asked me what evidence I had to comment on huge commissions. Isn’t he aware that one of the main reasons the OFT undertook a market study was because of the excessively high prices? When scrutinising value for customers, the OFT reports that “gross profits are high in the PPI sector and implies customers are receiving poor value”. Defaqto found that the most expensive mortgage policy is 160% more expensive than the cheapest.

l I believe the vast majority of single premium mortgage payment protection insurance policies have been mis-sold and it won’t be long before consumers realise they should be following in the footsteps of those who were mis-sold pensions or suffered endowment shortfalls.

The Financial Ombudsman Service reports that PPI complaints are increasing by 60% a year, higher than any other general insurance product, and is voicing concerns over the high incidents of inappropriate sales among the PPI cases it handles. The FOS currently upholds half of all PPI cases although the norm is one-third. Defaqto reports that “it is difficult to source a policy document prior to purchase and this clearly goes against treating customers fairly”.

I could provide counter-arguments for all his other comments but would like to leave space for other missives on this page. I’m sure your readers get the message – I do not make hollow claims. I am not the person damaging the reputation of the PPI sector and harming consumers. Britishinsurance.com regularly tops the national media’s PPI best buy price comparison tables. If only Reeh had bothered to check his facts before attacking me.

Simon Burgess
Managing director
Britishinsurance.com
By email

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