The Competition Commission recently announced that it was planning to introduce a ban on the sale of Payment Protection Insurance (PPI) at the point of sale for loans and credit cards. There would be a 14 day period before the finance provider could offer the customer a PPI policy to protect their new finance agreement.
The banks and finance companies make huge profits out of selling these policies which generally offer poor value for money. The main reason for this is that the purchaser has no time to look around at alternative PPI policies, they are asked to commit to a policy that they have not shopped around for. So the restriction on PPI sales means that customers who do want payment protection insurance (PPI) can do so in their own time and search out a good value policy that suits their needs and not those of the finance company.
Unfortunately, we have recently learned that this restriction will also apply to mortgage brokers and financial advisers who wish to offer Mortgage Payment Protection Insurance (MPPI) to their clients. This seems a little restrictive where the adviser or broker is actually providing advice on what is best for the client rather that just selling a policy. Mortgage brokers will always want to build long term relationships with clients so the last thing they want to do is be over zealous and offer a product which is not right for the client.
Only time will tell whether the Competition Commission proposals for the sale of PPI definitely include mortgage brokers but this look to be the case so far.