AMI’s response follows the Office of Fair Trading's (OFT) publication of its Payment Protection Insurance (PPI) market study in October this year and its request for comments on the proposed referral to the CC.
Rob Griffiths, associate director of AMI, said: “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. We are also keen to see that the PPI market works for consumers and delivers good value products which are supported by good quality product literature.
“However, we believe the MPPI sector is a unique sector and should be viewed differently to the other PPI markets the OFT identify. 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.”
OFT identified five separate PPI sectors in the UK market: MPPI, secured loan PPI, unsecured loan PPI, credit card PPI and store card PPI. In its report OFT is only minded to exclude store card PPI from its referral to the CC but AMI believes the MPPI sector should also be excluded.
AMI’s response focuses particular on MPPI and also offers some general comments about the OFT’s report and the PPI market in general. These include:
- AMI’s concern at the use of ‘anecdotal evidence’ within the report and a concern that OFT have not used the FSA’s more up-to-date Product Sales Data. AMI feel this would have given OFT a more rounded, accurate view of the current market situation to base its decision on.
- A call for greater publication of data on PPI, especially from the Financial Services Authority (FSA) in terms of the regulatory reporting data requirements, such as sales and complaints data for PPI.
- AMI’s view on what good looks like in relation to PPI products. Consumers must be clear on what they are/are not covered for and this could be achieved by better up-front plain English information.
- AMI’s support for delinking of the PPI policy from the credit product and unbundling of the individual elements of PPI.
- AMI’s disappointment that no distinction is made in the report between the different types of intermediary firm and that there is no differentiation between advised and non-advised sales, particularly as most MPPI sales are conducted on an advised basis.
“We believe the role of the mortgage intermediary in ‘shopping around’ for his/her client is crucial in the MPPI market. We also disagree that mortgage intermediaries would automatically include MPPI in quotes for the mortgage. MPPI is not sold as a ‘must have’ for the consumer and both products are clearly delinked.
“Our response acknowledges there is work to be done in the PPI market in terms of clearer information for customers, provision of claims data and commission transparency. But, we believe that the other PPI sectors can learn from the experience of the MPPI market.”
