MPPI: Research from CML shows almost one million policies sold in 2003
New figures from the Council of Mortgage Lenders (CML) show that 60% of homebuyers have some form of mortgage protection.
The number of borrowers with protection - including critical illness (CI) cover, income protection (IP), unemployment cover and mortgage payment protection insurance (MPPI) - increased by 23.5% between the first and second half of 2003. Almost one million MPPI policies were sold in 2003, which translates into 36% of all new loans advanced last year being protected by the plan.
The figures show that MPPI holders tend to let their policy lapse, however this has not affected overall protection take-up rates as more borrowers are opting for CI and IP cover.
One issue highlighted by the CML was that many borrowers are covered against some risks, but not others, depending on the type of protection they opt for. Peter Williams, deputy director general at the CML, said this is problematic, as many people do not have a clear understanding of the extent of gaps in the State system.
"The research also shows that we need to pursue a wider range of objectives - a simpler system of support, better knowledge among consumers about their exposure to risk, better protection during the nine-month qualifying period for State support and incentives for borrowers to protect themselves through a combination of insurance, savings and overpayments on flexible mortgages," he said.
The new figures follow a call for an urgent review into the sale of MPPI, by Liberal Democrat shadow chancellor Vince Cable. He has asked the Office of Fair Trading to investigate what he believes to be excessive commissions charged by lenders selling MPPI plans direct to borrowers.
"There is clearly a serious consumer scam operating in the market. The big banks and a small number of specialist brokers are taking advantage of weak rules, which do not require disclosure," he said.
