Let brokers halt the MPPI slump

Dubious selling practices and overpriced products have triggered a collapse of consumer confidence in income protection.

Some pundits suggest that although mortgage payment protection insurance has had a relatively clean bill of health compared with personal loans and credit cards, consumer confusion means they are seen as one and the same issue.

The government is keen for mortgage borrowers to increase take-up of these products and have some sort of payment protection in place. But how can the industry help tackle consumers’ two main concerns – that they are being ripped off and that claims may not be paid?

In this week’s cover feature starting on page 40, consumer champion Iain MacQueen-Sims argues that the most important cause of low MPPI penetration levels is the reluctance of brokers – who introduce the bulk of mortgage sales – to promote it.

MacQueen suggests this is no doubt partly due to poor product image, which can be addressed, but more importantly because brokers have to jump through so many regulatory hoops and are more vulnerable to claims of mis-selling than banks and white label outlets.

The feature questions why brokers sell any MPPI at all given that asymmetrical regulatory categories – execution-only, information-only and best advice, put them at such a disadvantage in the sales process, at least when it comes to MPPI.

Compared with pensions, investment products and even mortgage deals, insurance should be seen as one of the less complicated financial products available. But MPPI now has a host of variants including flat prices, age-banded pricing, waiting periods and excess periods periods to name but a few, making it something of a minefield for consumers and brokers.

The cover story examines these issues and assesses some of the ways brokers could play a role in restoring consumer confidence.