‘Reducing risks and protecting homeowners vital for lenders’

The director for provider British Money said outsourcing was the only way to tackle the “protection drought” and will allow lenders to let go of the risks associated with the product.

Mr Burgess said: “Industry statistics show that approximately 96 per cent of people with mortgages have no financial support mechanism to pay their bills if their salary goes, and with fewer lenders offering a solution, it its time for a specialist to step in and rectify the situation.”

He added: “Prime Minister David Cameron is calling for companies to ‘re-shore’ and use UK-based suppliers for their products and services. This is mutually beneficial to lender and borrower.”

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Last month, Alexander Burgess, who recently joined his father Simon at British Money, called on the government to rethink its changes to the Support for Mortgage Interest benefit, stating that it could cause “massive hardship and a significant number of repossessions”.

He said government proposals to transform the scheme from a benefit into a loan were “radical” and reinforced the need for homeowners to be given access to new-style protection policies designed to pay out during times of hardship.

Adviser view

Malcolm Steel, IFA for Mearns & Company in Edinburgh, said: “I agree that there is a need for greater financial protection for homeowners – it is the biggest liability they have. “Insurance is not always the best solution, though. Savings and emergency funds are important. It can be better to have a cash buffer in case you lose your job.”