Sales of mortgage payment protection insurance (MPPI) are generally compliant with Financial Services Authority (FSA) rules, the FSA has found.
Speaking at the Chartered Insurance Institute's annual conference, Clive Briault, managing director of retail markets at the FSA, announced that the regulator's recent study into the sales practices of payment protection insurance had revealed that the majority of MPPI sales do meet with FSA regulations. "We found that regular premium payment protection insurance sold with prime mortgages seems generally compliant with our rules, while selling practices in other sectors were very poor," said Briault.
These findings, however, sharply contradict recent criticism of the MPPI market, which argued that many consumers may have been mis-sold the cover. Commenting on the FSA's findings, Nick Kirwan, marketing director for protection at Scottish Widows, said the latest result does not seem to join up. "The results do seem to contrast quite sharply with what the insurance industry has argued," he said.
Roger Edwards, products director at Bright Grey, also found the result slightly contradictory: "MPPI is probably compliant with the rules of disclosing what is covered and what the key facts are.
"However, there is nothing in the key facts rules relating to the price charged for the MPPI product. So while it may meet the rules as far as the disclosure about what is covered it may still be over-priced and extremely profitable for people who choose to charge expensive rates."
Also expressing bewilderment at the result, Kevin Carr, head of strategic relations at LifeSearch, said: "We would question whether or not sales practices such as calling a PPI product 'income protection' or not telling a customer about IP when selling PPI are principles the FSA would encourage under its Treating Customers Fairly initiative as we think such practices are quite clearly unfair." FSA spokesman, Robin Gordon-Walker, said the regulator would be reviewing the MPPI market again in 2006 to ensure companies continue to comply with FSA rules.
