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MPPI tarred with the same brush as PPI

This article is part of
Guide to Mortgage Payment Protection Insurance

Tim Johnson, chief executive of Paymentshield, says unlike its mortgages cousin, scandal-hit standard payment protection insurance is linked to a single loan or product such as a credit card and is generally paid directly to the lender, rather than to the consumer.

MPPI in contrast is usually paid directly to the policyholder. MPPI can also be tailored to suit individual needs by an independent financial adviser or broker, Mr Johnson says, ensuring the policy undertaken provides adequate protection for the policyholder’s circumstances.

Another big difference between MPPI and PPI these days is supply, Ben Heffer, insight analyst for life and protection at Defaqto, points out.

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Following the PPI mis-selling scandal, while some forms of payment protection insurance remain only a few of these policies are available these days. This is in part because of restrictions that have been imposed in the wake of the PPI mis-selling scandal - which also apply to MPPI.

Mr Heffer says: “Since the Competition Commission’s remedies came into effect, it has not been allowed to sell a payment protection policy to a client at the time when the loan is arranged. A seven day period must elapse before the client can be offered PPI.

“Additionally, short-term income protection (STIP), a similar type of policy issued by the providers of PPI, can be offered to protect loan payments by protecting a certain percentage of the client’s income.”