New research from protection specialist LV= reveals that over a quarter (28%) of mortgage advisers are unaware that from 6 April 2012 they are not allowed to sell accident, sickness and unemployment style insurance products including PPI and MPPI[1] at the point of sale of a mortgage[2].
The sales ban is part of the Competition Commission's PPI order which outlines how PPI can be marketed to customers; how a PPI quote must be laid out; and makes it mandatory for customers to receive an annual review setting out the cost of PPI[3].
The research, carried out by LV= amongst advisers at a mortgage broker expo, reveals that while 72% know the ruling is coming into place, 52% are not fully aware of what the new rules mean.
Overall, three-quarters of mortgage advisers (71%) feel that there is not enough guidance given on how the new changes should be implemented.
However, it is clear that many mortgage advisers are getting to grips with what the ruling will mean for their business, as one in five (21%) say that they have already reviewed their processes to ensure they are compliant; and a third (31%) say that they have allocated time and resources to preparing for the changes.
Mark Jones, LV= Head of Protection said: "The implementation date for these changes is now less than a month away and will have a significant impact on the way protection products can be discussed when people are buying a mortgage. It’s worrying that many mortgage advisers aren’t aware of what they need to review ahead of this ruling coming into force, or even that new rules will apply. Many advisers will now be looking at products to sell as an alternative to MPPI, and we hope they use this opportunity to discuss longer-term income protection products with their clients."
LV='s Mortgage and Lifestyle Protection (MLP) product offers long-term protection against the loss of income through illness or accident, and also provides unemployment cover. MLP is not covered under the Competition Commission's ban, so can be sold at the point of sale with a mortgage. MLP was designed to offer mortgage advisers’ a high quality long-term protection product with a simplified sales process as an alternative to MPPI.
For further details on the LV= range of protection products, including Mortgage and Lifestyle Protection go to www.LV.com/adviser.
The sales ban is part of the Competition Commission's PPI order which outlines how PPI can be marketed to customers; how a PPI quote must be laid out; and makes it mandatory for customers to receive an annual review setting out the cost of PPI[3].
The research, carried out by LV= amongst advisers at a mortgage broker expo, reveals that while 72% know the ruling is coming into place, 52% are not fully aware of what the new rules mean.
Overall, three-quarters of mortgage advisers (71%) feel that there is not enough guidance given on how the new changes should be implemented.
However, it is clear that many mortgage advisers are getting to grips with what the ruling will mean for their business, as one in five (21%) say that they have already reviewed their processes to ensure they are compliant; and a third (31%) say that they have allocated time and resources to preparing for the changes.
Mark Jones, LV= Head of Protection said: "The implementation date for these changes is now less than a month away and will have a significant impact on the way protection products can be discussed when people are buying a mortgage. It’s worrying that many mortgage advisers aren’t aware of what they need to review ahead of this ruling coming into force, or even that new rules will apply. Many advisers will now be looking at products to sell as an alternative to MPPI, and we hope they use this opportunity to discuss longer-term income protection products with their clients."
LV='s Mortgage and Lifestyle Protection (MLP) product offers long-term protection against the loss of income through illness or accident, and also provides unemployment cover. MLP is not covered under the Competition Commission's ban, so can be sold at the point of sale with a mortgage. MLP was designed to offer mortgage advisers’ a high quality long-term protection product with a simplified sales process as an alternative to MPPI.
For further details on the LV= range of protection products, including Mortgage and Lifestyle Protection go to www.LV.com/adviser.
Notes to editors
[1] The ruling states that products that have a 'maximum time limited benefit period' e.g. pays out for a year; is written for a term of fewer than five years; and can be terminated by the insurer can not be sold at the point of sale of a loan or mortgage.[2] When a mortgage is being sold, advisers can provide a PPI quote to customers at any time. However, it can not be sold until seven days after the later of these two events - either the date the lender formally makes the mortgage offer to the customer or the date of the adviser provides the customer with a PPI quote.
Example: An adviser carries out a mortgage review on 1 May, puts in the mortgage application and produces an MPPI quote at the same time. If the customer gets a formal mortgage offer on 20 May, the earliest date that the adviser can sell MPPI to that customer is 27 May.
[3] The full Competition Commission ruling can be found here
Methodology: 117 mortgage brokers were surveyed at a Mortgage Broker Expo at the Excel Centre in November 2011
About LV=
LV= employs 5,000 people and serves over five million customers with a range of financial products. We are the UK's largest friendly society and a leading financial mutual.When we started in 1843 our goal was to give financial security to more than just a privileged few and for many decades we were most commonly associated with providing a method of saving to people of modest means. Today we follow a similar purpose, helping people to protect and provide for the things they love, although on a much larger scale and through a wide range of financial services including insurance, investment and retirement products.
We offer our services direct to consumers, as well as through IFAs and brokers, and through strategic partnerships with organisations such as ASDA, Nationwide Building Society and a range of trades unions.
LVFS is authorised and regulated by the Financial Services Authority, register number 110035. LVFS is a member of the ABI, the AFM and ILAG. Registered address: County Gates, Bournemouth BH1 2NF.