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Prepare for probe into MPPI sales, warns AMI

The FSA is set to investigate the way that mortgage payment protection insurance is sold.

Association of Mortgage Intermediaries director Chris Cummings told delegates at the Building Societies Association conference in Harrogate last week that they should prepare for visits from the FSA.

He said the FSA and AMI are concerned that building societies and other lenders spend little time discussing the protection needs of customers and are relying on a one-size-fits-all approach to selling MPPI.

Cummings said the length of time spent with customers is impeding the correct selling of MPPI. Latest figures from the AMI suggest that a typical mortgage sale takes between two and two-and-a-half hours but hardly any time is spent talking about the protection needs of the customer.

He also pointed to confusion in the market as to how many claims under MPPI policies are successful. The Council of Mortgage Lenders puts the figure at over 80 per cent while the Financial Ombudsman Service estimates it is only 50 per cent.

Cummings said: “The FSA feels very strongly that you cannot spend 85 per cent of your time talking about the mortgage, 10 per cent on chit-chat and 5 per cent on MPPI. Protection insurance is sold on a one-size-fits-all basis and that is not right.”

Portman Building Society group operations director Matthew Wyles said: “I am really concerned about MPPI. Lenders are doing little to qualify the product to customers. It is like selling an extended warranty on a washing machine. There is a one-size-fits-all approach. We need to identify and meet a variety of customer needs.”

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