Treasury select committee member Andy Love says he will continue to press for the mortgage market review to include a discussion about protection, despite the Treasury pouring cold water on the idea.
Love called for loan protection to be discussed as part of the MMR in a Westminster Hall debate last month. On 20 May, Treasury economic secretary Andrea Leadsom wrote to Love saying she would be cautious about giving loan protection prevalence in the regulations.
Speaking to Money Marketing, Love says that around 80 per cent of mortgages are sold without protection and that this gap must be addressed before rate rises or changes in personal circumstance mean people begin struggling to meet payments.
He says that the Financial Conduct Authority’s consumer protection objective should justify regulatory intervention and that the conversation could raise protection in general instead of one form of it.
He says: “I understand the arguments she has made but the need for consumer protection here should be a priority.
“If they do not like my suggestion I’m happy to consider others as to how we can get back to a situation where there is an active discussion when someone takes out a mortgage or loan as to some form of protection.”
Leadsom’s letter said: “Overall I am not convinced that there is a compelling case for this type of product being given particular support through regulations. I agree there is a place for loan protection products and that we need to consider ways to support the growth of a responsible market is such products.”
In last month’s debate, Love also called on the Government to conduct a review of the protection gap, something the minister’s letter did not address.
Love says: “I will respond to the letter raising again the issue of doing some research here. We need it to give us an overall sense of how difficult the situation is and how many people have no form of income insurance or mortgage insurance as a back up.”