Alexander Burgess is director of British Money
Like the curate’s egg, the mortgage industry is currently only good in parts. Profiteering by the claims management industry, with the assistance of the Financial Ombudsman Service and Financial Regulators, has resulted in a maelstrom of complaints for PPI mis-selling and on the face of it this means that it is no longer safe or financially viable for any responsible mortgage lender to advise on mortgage payment protection. This has led to a huge protection gap, with mortgage borrowers having to rely on their savings, payday lenders, or meagre and means-tested State Benefits to repay their mortgage, if they lose their job or are disabled and unable to work.
I fully appreciate the general scepticism among lenders about your ability to generate a worthwhile return from the sale of MPPI. However those who proactively tackle this important issue face a win, win scenario.
MPPI is a prudent, mutually beneficial risk management tool that reduces the risk of debt escalation. Furthermore, it can be highly lucrative, if the mortgage lender acts solely as a distributor and transfers the regulatory, reputational and financial risks to an independent third party specialist.
This is mutually beneficial for lenders and mortgage borrowers alike.
