FSA voices concerns over MPPI sales
The FSA has revealed its concern about the way insurers are treating customers who buy mortgage protection products.
Speaking at the Association of British Insurers' biennial conference last week,Lord Turner, chairman of the FSA, said the regulator was prepared to intervene in cases where treating customers fairly (TCF) was not being applied to customers who bought mortgage payment protection insurance (MPPI).
Turner revealed he had observed some MPPI providers had been reducing cover and increasing premiums at a time when consumers were most likely to need the protection, adding that premium increases raised issues of unfair contract terms and disclosure while breaching TCF principles.
He said: "As the likelihood of unemployment-related claims increases, some insurers are responding by increasing premiums or reducing cover for existing policyholders."
Clive Waller, consultant at CWC Research, said the FSA's comments on MPPI were overdue and vague. He said: "Lord Turner's comments are somewhat naive and outdated. MPPI has been mis-sold horribly for years and the FSA did nothing about it. The form of the intervention has not been mentioned either."
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