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From Adviser Guide: Mortgage Payment Protection Insurance

Q: What MPPI after-sales support must I provide?

New laws mean advisers selling MPPI have a number of simple obligations.

By Oliver Haill | Published Aug 30, 2012 | comments

As well as banning the selling of single-premium PPI policies, new laws mean advisers selling MPPI have an obligation to provide a personal quote, drawing out the cost of the product along with the fine points of the cover.

The rules also require the provider to send out a yearly review that details the cost of MPPI and includes a reminder of the consumer’s right to cancel.

Moreover, MPPI will usually have a waiting period before a claim can be made. That will typically be 30 days but some policies may offer back to day one following the initial waiting period.

It’s worth checking what exclusion periods there may be, especially if there is no new mortgage being taken alongside. Some providers offer cover for 12 months and others will pay for up to 24 months.

In addition, some policies will allow a little more to be covered than the mortgage payment in order to help with household bills.

“Due to recent changes following investigation by the Competition Commission, it will take a minimum of 24 hours to initially deliver a policy as it is not possible to process an application within the first 24 hours of issuing the recommendation,” explains David Hollingworth, associate director at London & Country Mortgages.

“MPPI is an extremely simple insurance and so it can be put in place quickly.”

If your client’s financial circumstances change, there might be work for you to do, advises Mr Hollingworth.

“Regular reviews of your client’s policy is always a good idea as identifying a change in circumstances, debt or interest rate, may mean that things need to be addressed differently.

“In many cases the MPPI will remain a valid option but changes in employment type could give rise to a rethink.”

Dennis Haggerty, marketing manager at iprotectinsurance.co.uk, adds: “The terms of an MPPI policy can be changed at any time and the providers mid-term adjustment process should enable the policy to reflect those changed circumstances, including cancellation if the policy is no longer relevant for their needs.”

And, unless stipulated in the agency agreement, the provider will keep in contact with the client via you, the intermediary.

“However, most contracts with providers will place all post-sale servicing in the hands of that provider,” says Mr Haggerty. “They employ the usual means of communication including the provision of a – compulsory – annual statement to the customer confirming premiums paid.

“There is not a general need for day to day contact,” agrees Mr Hollingworth. “However the provider will, due to recent regulation changes, send out an annual review detailing the amount of cover and the cost and of course will be in touch if there is a need to review the premium.

“Clearly there will be a claims process for the borrower if they are in the unfortunate situation of having to initiate a claim.”

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