FSA orders GBP 60 Million Mortgage Protection Insurance Repayments
More than a million UK householders are to get refunds on their recent mortgage protection insurance monthly payments, after the City watchdog, the FSA, forced PPI providers including giant firms such as Aviva and Abbey; to pay back over GBP60 million in increased Mortgage Protection Insurance premiums, which were slapped on already cash strapped mortgage borrowers earlier this year. Over 2.1 million UK consumers have policies to repay mortgages and loans with accident, sickness and unemployment insurance attached.
The major UK money lenders have had over 10 years of collecting premiums on inflated house prices, with very few claims. But with claims now rising due to the recession, they've been recently hiking up the rates on many of these policies to maintain their profit levels.
The Financial Services Authority (FSA) and Mortgage Payment Protection Insurance (MPPI) firms have agreed an industry-wide package of measures for consumers, including refunds of around £60 million.
The industry has acted in response to FSA concerns over recent increases in premiums and reductions in what customers are covered for under their policy. The FSA’s concerns centred on the terms permitting these changes, and how clearly they were disclosed. The FSA expects its concerns to be addressed by the agreement reached. Following discussions initiated by the FSA with relevant trade bodies and some firms, the industry has responded positively by agreeing to:
• proactively refund increases in premiums, and reverse any reductions in cover, for customers who have experienced these changes to their policy in 2009; • offer to reinstate policies where a customer had cancelled it within two months of an increase in premium or reduction in cover made during 2009; • freeze premiums and cover for existing customers for at least the remainder of this year • amend Mortgage Protection Insurance contracts to ensure that all customers are made aware of the circumstances in which firms have the right to vary premiums and cover.
New contracts will mean customers get a fairer deal with two months' notice of any changes to enable people to compare mortgage protection insurance products and switch mortgage protection if necessary.
Jon Pain, managing director of supervision at the FSA, said:
"The FSA welcomes this positive move by Mortgage Protection Insurance firms to reverse recent changes in premiums or cover which will put affected customers back in the position they were in before the policy was changed. It will also give all MPPI customers clarity about when and why firms will be able to vary these in future. "This clarity will provide the basis for MPPI to remain a valuable option for many mortgage customers who wish to take out protection, alongside the mortgage commitment they are taking on." The affected companies will contact customers if their policy is affected, and will make all refunds by the end of June 2010.
The Consumer Panel has also welcomed the announcement today of FSA action and an industry-wide refund on Mortgage Protection Insurance. Adam Phillips, Chairman of the Financial Services Consumer Panel, said: “This is exactly what a financial regulator should be here for and we applaud the FSA’s action. It cannot be right that firms change the terms and conditions of an insurance policy just as times get hard and when people are more likely to try to claim on it. We note that this agreement is to freeze premiums and cover for existing customers until at least January 2010. We will be watching to see how the FSA ensures Mortgage Protection customers continue to get a fair deal beyond this date. Significant changes to cover go against the whole principle of why people pay for insurance and undermine consumers’ trust in the industry.”
Burgesses Insurance News has published an interesting article today looking at the rationale behind the purchasing of insurance as a protection vehicle, and questions why the public are disinterested and can't be bothered when it comes to purchasing Mortgage Protection for the largest investment of all - a house!...........
It it just that the public doesn't appreciate the risks? Until it is too late....
Mortgage insurance – why be vulnerable?
First Published Burgesses.com July 27th, 2009 in Mortgage Insurance |
Most people are thoroughly accustomed to one of the most basic principles of insurance – if something is valuable, it is probably worth insuring. Although the principle might be widely recognised in many other areas of domestic life, however, for some reason it does not seem to be so readily grasped when it comes to mortgage insurance.
Only an estimated 25% of the nation’s 11.7 million mortgage borrowers are believed to have arranged this potentially indispensable for of insurance. Given the sheer value of the mortgaged homes, not to mention the dire consequences of defaulting on the mortgage repayments, the statistic is surprising to say the least. Some three-quarters of borrowers seem to be leaving themselves vulnerable to the most common risks to their incomes – accidents, illnesses and unemployment – and with the loss of an income, the ability to continue their mortgage repayments.
The penalties for defaulting on the mortgage repayments, of course, can be serious indeed. In the worst cases, it can lead to repossession of the home itself by a mortgage lender determined to recover the outstanding debt. But even if some arrangement can be reached with the lender, the homeowner is still vulnerable. If mortgage repayments cannot be made, the home might have to be sold – even though the current state of the housing market might mean that such a sale realises less than the outstanding mortgage debt. At the very least, the late or non-payment of the mortgage instalments as they fall due will attract adverse credit reports on the borrower’s file. This will make borrowing – or any other form of credit – more expensive to arrange in the future, if the facility is extended to the individual at all.
This is a vulnerability that the homeowner can easily avoid with mortgage insurance. The insurance can offer complete protection for the mortgage repayments in the event that the policy holder meets with an accident or suffers an illness that prevents normal earnings from work. The same protection is also extended if the policy holder loses his or her job through compulsory redundancy. In any of these events, such a policy will pay out an insured benefit from which the mortgage repayments can continue to be paid – in many instances, directly to the mortgage lender concerned, if needs be.
Once in payment, the mortgage insurance monthly benefit payments ensure that the mortgage is repaid every month that the policy holder remains incapacitated for work, involuntarily unemployed, or for up to a typical maximum period of 12 months, whichever is the shorter time. Taking up the option offered by some policies, payouts can be made over an even longer period and extended for up to a maximum of 24 months, if an additional premium is paid.
Mis-Sold Payment Protection Insurance? Claim It Back Now!
Have You Been Mis-Sold Payment Protection Insurance?
If you took out a loan, mortgage or credit card from a bank or building society in the UK the chances are that you were mis-sold payment protection insurance or PPI as it is often known. The law has now changed and it is possible to reclaim all your payments in full plus in some cases, damages, usually at no cost to yourself through a so called no win no fee agreement..
The types of policies that were mis-sold were mortgage protection, loan payment protection insurance, Credit card insurance and in some cases and income protection. Whether you qualify to claim depends very much upon when you were mis-sold the policy. The new law only covers payment protection insurance policies sold after January 2005. However, many lawyers will pursue on you behalf policies sold before the cut off date, and in many cases recover your payments. there are numerous no-win no-fee law firms starting up to pursue these errant banks and lenders through the UK courts in what has become a multi-billion dollar business.
The good news for the claimant is that these law firms handle everything for you and the only contribution you have to make is confirming the mis-selling took place and banking the check.
You are eligible to claim through the UK courts against a lender who mis-sold you payment protection insurance if you can satisfy any one of the following 13 conditions.
1. The PPI was added without your express agreement or knowledge.
2. The sales staff or person selling the mortgage or loan insurance was coercive, pushy and strongly advised you to take out the PPI cover.
3. You were told you had to take the payment insurance.
4. You were told you could not get the mortgage without MPPI.
5. You were told you could not get the loan without loan payment protection insurance.
6. The cover you were offered was included in the loan or mortgage
7. You knew you were soon to be unemployed.
8. You were self-employed when the payment protection was sold to you.
9. You were retired or over the age limit for PPi cover which is usually 65.
10. You were not asked about any pre-existing medical conditions that you may have suffered from.
11. You were not told that pre-existing medical conditions could affect your insurance cover.
12. You were not informed that the UK's two largest problems for time of work, namely stress and back problems were excluded from the insurance/ or you informed the lenders staff about your medical condition but was not warned that this would affect the protection insurance cover in the event of a claim.
13. You were not asked if you already had any existing mortgage protection or loan insurance in place elsewhere or employer benefits that would cover my repayments.
If any of the above instances apply to you , you have probably been mis-sold payment protection cover and need to contact a solicitor or specialist lawyer who will claim on your behalf. Act now as there may well be additional time limitations put in place as the number of claims rises.
For the latest news of the cheapest payment protection insurance available from independent UK suppliers visit the Payment Protection Insurance News website run by specialist provider Burgesses.com.
Payment Protection Insurance Claims and Premiums Rocket
The recent tide of misselling of Payment Protection Insurance in the UK , in particular the outlawed single premium PPI cover, is ripping back to catch those offending banks and lenders through the UK courts.
If you have been 'sold' either Mortgage Payment Protection Insurance, Loan Payment Protection Insurance or credit card insurance during the last four years, you more than likely have the opportunity to claim all of your premiums back!
Before you go running to many of the no-win no-fee PPI claims lawyers that are springing up everywhere, your first port of call should be to complain to the offending bank, lender or finance company that mis-sold you the protection. If you do not get any from them then you should immediately contact the Financial Ombudsman
The number of PPI mis-sold policy complaints being upheld against financial services companies has soared during the past year, according to the Financial Ombudsman Service Annual report, which deals with public complaints about Insurance.
The number of complaints about payment protection insurance misselling tripled to 31,066 during the last year, this followed a five-fold increase in complaints during the previous year. The number of PPI complaints upheld by the Ombudsman was an astonishing 89 per cent proving that the policies were widely missold.
The Ombudsman blamed the situation on the economic downturn, saying some firms were not investigating claims properly before they were referred to the service because they were watching their bottom line. It added that survey evidence suggested that many consumers were being put off pursuing complaints against companies because of the unhelpful attitude of the firms involved.
If you believe you have been mis-sold a PPI policy you should write to the company involved. You should tell them that you do not believe that the PPI you bought was sold in your best interests. you should tell them thatunless they can prove that the policy was fair and reasonable and that yuo were treated fairly when sold the insurance - that you demand a full refund of all premiums, and subsequent interest on these payments, that you have paid in relation to this policy. You should also inform them that you also expect 8% interest to be added to each payment you have made - as this is the statutory amount a UK court would pay.
Around half of the complaints against PPI misselling related to six of the UK’s largest financial institutions! PPI is still a good product for Accident Sickness and Unemployment protection, however it is wise and much cheaper to purchase this type of cover on a monthly basis from one of the leadinbg Uk independent PPI providers.
Some examples of these are:
Burgesses - the UK's leading PPI suppliers Personal Accident - Compare mortgage protection and Income protection insurance rates and plans iProtect - offering free swtich facilities at great rates British Insurance - various PPI online offerings at competitive rates Understanding PPI
Mortgage Protection Insurance or get a gang of cats
Love this offering from one of British Insurance ad agencies for their latest award winning mortgage payment protection insurance. Funny film noir - Ealing style
The official figures for the number of repossessions for the period of April to June this year have just been released and show that the number of houses being taken back by the banks and building societies through the courts, has risen a massive 71% than a year earlier.
With 11,054 new cases in Q2, the Council of Mortgage Lenders are predicting even higher repossessions for the period just finished and a spokesman estimates that by Christmas 2008 170,000 homes will be under threat from repossession, being 3 months or more behind with their mortgage repayments.
With the economy only just on the start of the road to recession, the picture for the new year looks gloomier daily.
If you believe that your job may be under threat in the not too distant future, mortgage payment protection insurance is the sensible option to keep the baillifs and wolves from your door. You should be aware that these policies will not pay out if you are made unemployed during the first month of the policy - so act now!
UK Finance Giants withdraw Unemployment Mortgage Protection Insurance for own employees
Insurers may withdraw Mortgage Protection Insurance cover to their own employees
In the wake of the credit crunch, collapse of Lehman Bros. , the inevitable threat hanging over the future of Amercian insurance giant AIG, and the unprecedented collapse of UK Insurance giant HBOS shares by 40% in one day, you could argue that MPPI unemployment Insurers are right to worry and already some capital lenders are refusing to offer payment protection insurance to homeowners and employees who work for banks and building societies. Some Underwriters have gone further becoming more risk averse and have included all financial services sector workers including insurance company employees, IFAS and insurance broker staff. This adds to the growing list of trades and professions who are now finding it increasingly difficult to puchase unemployment insurance to protect their mortgages, income level or loans.
Construction workers, estate agents, conveyancing solicitors and services and more recently removal firm staff can no longer easily purchase mortgage payment protection insurance or the other products that could ease the pain of being unemployed.
The move could be indicative that the UK Insurance market is heading for recession. Insurance Staff have been made unemployed gradually over the the last six months, with a recent 6000 redundancies at Norwich Union flying under the general radar, with other insurance company giants creating redundancy hitlists.
A spokesperson for Personal Accident - one of the UK's largest online independent mortgage protection insurance providers, who compare policies on price and cover - said, "It's true that we have received notices from some of our underwriters withdrawing certain particular income related unemployment cover for a list of trades within the financial services sector. However we can still offer age-related policies for income protection insurance and mortgage protection insurance to all bank and building society staff, which generally offer better cover at lower prices as they are not lifestyle rated and available to anyone. As these are monthly policies they are simple to change midstream - you could save yourself a fortune in premiums if you switch your policy from a bank or building society and a lot of worry if you are unfortunate and join the ranks of the mass unemployed, or your building society or bank collapses leaving your policy worthless. Could you meet your mortgage repayments or pay bills without a job? These are very worrying times...."
Simon Burgess head of independent provider Burgesses agreed. "Age-related unemploment insurance offers the best solution to financial services workers who may be threatened with unemployment. We offer policies to cover your mortgage, wages or debts whilst you are unemployed. I would however advise anyone thinking of protecting themselves from financial harm if they lose their job, to act fast as there is a ninety day exclusion no claims period from the start of the policy." He added, "Although our mortgage protection insurance has seen a downturn with the number of new mortgages being taken out virtually non-existant due to the credit crunch, we have recently seen a sharp rise in the number of unemployment insurance applications, particularly from workers in financial services."
So it appears that if you want to be able to pay your mortgage in three months time or still have an income you should take out payment protection insurance cover today. This is particularly prudent for financial services sector workers whose jobs appear to be most at risk.
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