Following leaked details of talks between debt charities and mortgage lenders, Moneynet.co.uk has condemned the proposals and said any plans to make MPPI mandatory should be stopped.
Commenting, Richard Brown, chief executive at Moneynet, said: “Making this insurance compulsory would effectively mean substantial additional monthly costs would be passed on to homeowners, even if, as has been hinted, the Treasury demands lenders and mortgage companies provide the cover as a bolt-on to protect borrowers against falling into deep debt should they lose their jobs or be unable to work.”
Currently, 24 per cent of UK homeowners have an MPPI policy in place, said Brown. He added that while the insurance did offer some protection for certain people, he stressed the importance of consumers shopping around.
He said: “If this does become compulsory, then it is imperative that it is not tied-in with the mortgage and that customers are encouraged to shop around. While for many people this insurance offers valuable protection, we would caution against accepting quotes from most of the high-street lenders. MPPI cover can be bought through independent firms for a fraction of the cost of an identical policy offered by some lending giants.”
Bernard Clarke, communications manager at the Council of Mortgage Lenders (CML), also voiced his concerns against the planned proposals. He said: “It is not appropriate to make MPPI compulsory. Borrowers have differing needs and as a result have different protection requirements. Some borrowers have enough savings to cater for any problems, while for others another type of insurance may be relevant. Therefore, to compel people to buy MPPI and have the extra costs without providing them with the benefits they need is just not appropriate.”
