The mortgage industry should expect compensation claims from customers who were not offered financial support mechanisms when taking out their loans, claims management firms have said.
The mortgage protection provider British Money asked 100 claims management companies to identify the next financial services mis-selling scandal and found 79% believe lenders' failures to discuss or offer PPI or obtain an acceptable disclaimer could expose them to a compensation bill of around £1bn.
British Money pointed out that, currently, 46% of mortgage lenders do not discuss or offer financial protection plans to borrowers, increasing the risk of payment default.
Alexander Burgess, director at British Money, said,: "Feedback from claims management firms suggest what is rife within the mortgage sector is equally widespread elsewhere.
"It's a shame lenders aren't acting prudently, discussing financial protection options and if they're rejected, keeping a disclaimer on file. These simple measures could avert a second PPI-associated catastrophe.
"It's interesting the FCA encourages lenders to look carefully at ‘customers' financial situations', but not debt prevention measures. Isn't this part of that ‘financial situation'?
"And how can it be ‘a personal decision for the consumer to take advice' if they're not offered it in the first place?"
