The trade body concurred with some of the OFT’s findings, but highlighted MPPI as being different to ordinary payment protection insurance (PPI) and argued that MPPI was often sold in an advised environment, giving the client greater protection.
Rob Griffiths, associate director of AMI, commented: “AMI shares some of OFT’s concerns about how consumers buy PPI, their understanding of the product and the quality of information available to them. In the report, OFT itself calls MPPI ‘something of a special case within the PPI sector’ and AMI’s belief is that its special nature, especially the robust MPPI sales processes that have been adopted by mortgage intermediaries, mark the sector out as distinct.”
Both the Council of Mortgage Lenders and the Building Societies Association have already called for MPPI to be excluded, adding further pressure from the industry.
Griffiths believed the PPI market can learn from the experiences of the MPPI market, with greater transparency on product information and data held by the Financial Services Authority and the de-linking of PPI from the product.
Roger Edwards, product director at Bright Grey, believed the OFT was looking at it from the wrong direction.
“I have to say I have some sympathy that MPPI has been tarred with the same brush as PPI but a lot of people and the regulators don’t understand the difference in the two products as on the face of it, they are similar in their aims. However, I think there is the question of giving better long-term value for the product as usually there is only one year of cover. The OFT is probably not looking at this though and just focusing on pricing.”
