Advisers have slammed building society Nationwide following its decision to offer three months' free...
Advisers have slammed building society Nationwide following its decision to offer three months' free MPPI cover to new customers taking out a mortgage and to existing customers who are moving house.
Nationwide has said that it launched the free offer to provide borrowers with peace of mind in the event of an accident, illness or unemployment. But advisers have attacked the move as an exercise to achieve more sales of MPPI cover.
Commenting, Peter Chadborn, principal at Chadborn Baker & Kearle said: "This is extremely worrying as it leads consumers to protect their mortgage on the basis of something which is free. It is creating a false sense of security and could be construed as mis-leading. Offering it for free means nothing, as the likelihood of someone claiming in three months is very low."
Chadborn added that such offers are doing nothing to help consumers understand the different products available in the market. Or indeed, the need for protection as a whole.
"None of these consumers will get advice and they will not understand the benefits and differentials between products such as MPPI and IP. It is bordering on worthless," he said.
Defending the move, Frank Creighton, spokesperson at Nationwide, said: "Mortgage payment protection cover caters for unemployment, which IP often does not. They are two different products. By launching three months' free MPPI premiums, we are encouraging consumers to acknowledge the need to protect themselves against the uncertainties of life."
Hitting back, Kevin Carr, senior technical adviser at LifeSearch dismissed Nationwide's stance. "Gimmicks such as free premiums are just another way of misleading consumers so that they do not ask the important questions," he said.
