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Shake-up aiming to raise standards on MPPI

The minimum standards for lenders to follow when providing mortgage payment protection insurance products are to be revamped to help to bring better consu- mer protection.

The Association of British Insurers and the Council of Mortgage Lenders are finalising changes to the MPPI baseline, a voluntary code which sets out the basic cover that consumers should be offered. The changes are expected to be ready by the end of the year.

But brokers have dismissed the moves as a smokescreen, claiming that the CML and ABI are not addressing the real concerns in the market, such as high excess periods on policies.

The two trade bodies are discussing changes to spec- ific policy exclusions and wordings of clauses, as well as the portability of policies.

The industry is also set to produce a consumer guide for all types of payment protection insurance and improve its transparency on refund policies later this year.

British Insurance managing director Simon Burgess says: “They need to scrap the 60-day excess as nothing gets paid till day 90 in many cases, as it is backdated, meaning the mortgage is in arrears. It is all window-dressing. The sub-prime mortgage market is worse than any other type of PPI.”

The CML says in its response to the Office of Fair Trad- ing’s study into the PPI market: “The review of the baseline is to reflect regulatory and socio-economic changes that have taken place.”

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