With consumer debt at record levels, most mortgage borrowers should consider some form of financial protection. Indeed, our sub-prime cover feature starting on page 39 this week looks at some of the problems borrowers who fall into financial difficulty can face.But the product specifically designed to protect borrowers from financial hardship, payment protection insurance, is now the subject of hostile media coverage and consumer watchdog criticism for being over-priced, poor value, opaque and of marginal benefit. One major problem is that brokers, who place some 60% to 70% of new mortgage business, are only responsible for 25% of all MPPI sales at most – even though they have access to better products than lenders in terms of pricing and cover. If MPPI should underpin your clients’ financial health, market penetration is woefully low and mortgage brokers’ contribution is much less than it should be. Perhaps the sales process is not cost-effective and too time consuming, or there is widespread concern about the products’ negative image. Or maybe it’s easier to pass, in favour of lenders’ inhouse products. But if those products are inferior to those available on the open market, how does that figure when it comes to general insurance regulations and best advice? There is concern among brokers that they operate in a best advice minefield, being far more exposed to mis-selling claims than banks and white label operations that enjoy information- only status and a less intrusive regulatory regime. Such concerns may be mere perceptions but there is real substance to the charge that when it comes to selling MPPI, it is not a level playing field. This, no doubt, is a significant factor in mortgage intermediaries’ seeming reluctance to sell the product. As an intermediary you should at least make your clients aware of the problems they could face without protection.
- Top trends
- Top trends
Moneyquest has unveiled the appointment of leading Scots businessman Angus McSween as its first chairman.McSween, CEO of web security company Iomart and current holder of the Glenfiddich Spirit of Scotland Award for Business, will now oversee Scots-based Moneyquests two-year expansion plan and drive towards AIM listing.Moneyquest, which handled over 1bn of mortgage business last year […]
Northern Rock has cut rates on its two and five-year flexible base rate tracker deals.
Property expert Phil Spencer will be giving a series of free seminars on the First Active Mortgages stand at the Ideal Home Show, Earls Court, London on Friday October 7 and Saturday October 8He will be offering insight on the current housing market and how to add value to your house, as well as offering […]
Monaco tax haven, playground of the rich and shameless, home of Monte Carlo, the Grand Prix and…MS editor Robyn Hall. Well, at least for the most part of last week, having been forced to spend three days at the luxurious Hermitage Hotel for the annual Bankhall sales conference. Arduous by anyone’s standards but made more […]
LendInvest has been a specialist bridging lender since 2008 at the heart of a sector that has become increasingly competitive and professional over the years. Despite a surge in media coverage, a few stubborn myths about bridging finance linger. Here are the most common misconceptions. Once unpicked they reveal bridging finance to be a useful […]
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