In his Mortgage Solutions blog, Connells mortgage services director Ross Bowen argued that protection covers more than just borrowers, helping lenders and brokers too.
Ian Smart, head of product development and technical support at Bright Grey
It may seem an odd thing to argue from the point of view a protection provider, but I don't believe that it should be mandatory to purchase protection as part of a mortgage.
Everyone's circumstances are different and consequently we each need a different flavour of protection to meet our particular needs.
After all why would a young single person with no dependents need life cover?
Their first priority should be income protection, as they will have a much greater chance of becoming ill and being unable to work than they will of dying.
When protection was mandatory previously, this was more about lenders generating extra income and providing additional security for themselves than genuine concern for the client's circumstances.
And in some cases, inappropriate cover would have been purchased purely to secure a particular mortgage deal.
It could also reduce competition and remove an element of choice for the consumer.
We have seen this most recently with payment protection insurance, where lenders sold this alongside the mortgage with no explanation that alternative cheaper products may be available and, in some cases, not even checking that the client was eligible for the cover.
What should be mandatory is an explanation of the risks that the client is running by not taking out appropriate protection and of the products available to mitigate that risk.
This could be a generic booklet produced by the ABI or Money Advice Service that lenders and mortgage brokers would have to give to the client before the mortgage is arranged so that an informed decision can be made about what cover is the most appropriate.
Whilst there are some leaflets available already these do not go far enough.
Making these mandatory with a fuller explanation can only be a positive step.
