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Brokers unaware of new PPI rules

A worrying number of mortgage brokers are not aware of the implications of new rules on the way payment protection insurance is sold coming into force next month, according to LV=.

Under the Competition Commission’s PPI order, from April 6 intermediaries will no longer be able to sell accident, sickness and unemployment style insurance products – including PPI and mortgage payment protection insurance – at the point of sale of a mortgage.

While advisers will still be able to provide a quote at any time, they will only be able to sell a policy seven days after either the date the lender formally makes the mortgage offer or the date the quote is provided, whichever is later.

A survey of 117 mortgage brokers carried out by LV= shows that 28% are not aware they will no longer be allowed to sell products of this kind at point of sale from April 6.

The poll reveals that while 72% know the ruling is coming into place, 52% are not fully aware of what the new rules mean.

Some 71% of respondents feel that there is not enough guidance on how the new changes should be implemented.

One in five brokers say they have already reviewed their processes to ensure they are compliant with the changes and a third say they have allocated time and resources to prepare.

Mark Jones, head of protection at LV=, says the changes will have a significant impact on the way protection products are discussed when consumers are taking out a mortgage.

He says: “It’s worrying that many mortgage advisers aren’t aware of what they need to review ahead of this ruling coming into force, or even that new rules will apply.

“Many advisers will now be looking at products to sell as an alternative to MPPI, and we hope they use this opportunity to discuss longer-term income protection products with their clients.”

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Comments
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  • Rudolph Hucker 13th March 2012 at 1:42 pm

    Anon 1.44 pm

    You work for L&G, right?

  • Rudolph Hucker 13th March 2012 at 1:42 pm

    Anon 1.44 pm

    You work for L&G right?

  • Mary Lockyer 12th March 2012 at 3:30 pm

    Fine about ensuring we quote after the mortgage offer has been issued, but it should still be factored into a sensible affordability plan, as without any cover clients will potentilly be “self insuring”, which a majority are not in a position to do. Fully support steps to prevent mis selling, hope they read the offer and note the “what if ” warning, most cases of PPI complaints were single premium added to the loan and sold mostly by bancassurance,

  • Tom Cleary 12th March 2012 at 1:44 pm

    Don’t panic! You just have to wait for the later of seven days after the mortgage offer has been issued or seven days after the quote is dated. Not a problem and the new Lifestyle Cover from Legal & General is available to renters as well as mortgage holders, so all good news guys…