By Robyn Hall Commission on point of sale products, including mortgage payment protection insurance ...
By Robyn Hall
Commission on point of sale products, including mortgage payment protection insurance (MPPI), could be scrapped if plans for statutory mortgage regulation are given the green light.
Ian MacQueen-Sims, a member of the Financial Services Authority's mortgage advisory panel, said the idea had been widely trailed in Government and could come into force alongside the statutory regulation of mortgages.
He said: "As I understand it, this would affect commission to lenders, brokers and IFAs. The reasoning behind such a move is that when you have a situation where the adviser, be they a lender or an intermediary, earns more commission out of peripheral products as opposed to core products, you will have abuse. If you target the cause of that abuse you remove a lot of the problem."
However, it has not been decided whether the Government will ban all commission at point of sale or opt for a full disclosure regime.
MacQueen-Sims, adviser to several prominent backbench MPs and also director of the mortgage audit company Mortgage Check, added: "Do you say you cannot sell insurance products at point of sale? Do you say that if you sell insurance products you have to disclose the amount of commission received and not just as a percentage? Or do you scrap commission levels altogether at point of sale? I think that question is still waiting to be answered."
But industry experts also believe lenders will soon develop products that would include MPPI and possibly buildings and contents cover in one package.
Harry Hill, managing director of Countrywide Assured Group, said: "People in the mortgage arena already have a cooling off period. This is because they may sign a mortgage proposal this afternoon, but the chances are they will not enter into a detailed commitment to take that mortgage for six to 10 weeks. If a combined MPPI or buildings and contents mortgage was available as part of our menu of products we would be happy to offer it to the public."
Mike Carpenter, an IFA with Portfolio Insurance Consultants in Hatfield, said: "MPPI is one thing but what other contracts are we talking about? As far as IFAs and mortgage brokers are concerned it forces us to go further towards being fee-based. Our clients will be pushed to fee-based advice rather than the commission option."
A spokesperson for the Financial Services Authority said: "We do not regulate mortgages yet, or general insurance."
