This is as a result of the bad press surrounding the recent Payment Protection Insurance (PPI) investigation.
The study polled over 1,500 consumers and more than 250 intermediaries on the impact of the recent PPI investigation and how it is affecting their concerns and perceptions.
Almost half (47 per cent) of all homeowners are aware of the recent investigation into PPI and the current criticism of the product. However, nearly nine in 10 (87 per cent) believe the criticism applies to all PPI products, including MPPI. Only 5 per cent of homeowners knew the investigation related to PPI products for credit cards and unsecured loans only.
As a result of this apparent confusion between the products, nearly half (49 per cent) of all homeowners say they are now more cautious about taking out MPPI policies. This experience is being mirrored by intermediaries, with 68 per cent saying consumers are now more reluctant to consider MPPI. Other deterrents for consumers are fear that the policy wouldn’t pay-out if something happened, or that the situation would never arise when they would need cover.
Both intermediaries and consumers agree that intermediaries are the best source to turn to for impartial advice on MPPI, with one in three (32 per cent) consumers saying they would turn to their mortgage adviser. Less than a quarter (24 per cent) would turn to their bank or building society, while 21 per cent would ask their friends or family.
In general, intermediaries seem happy to take on this role of educator, with 37 per cent saying it should be their responsibility to make sure consumers are fully informed and educated about MPPI. They also state that the media (19 per cent) and industry bodies (19 per cent) should take an active part, followed by providers (12 per cent) and banks and building societies (4 per cent).
Chris Traynor, Paymentshield sales and marketing director, said: “It is worrying to see that people are shying away from MPPI as a result of the PPI investigation. Our survey shows that there are real misconceptions amongst consumers about the value and importance of MPPI and people are still confusing it with PPI.
“We believe that MPPI is an appropriate product for at least one in three consumers. However, these statistics are falling woefully short, leaving many people potentially unable to meet their mortgage repayments in the event of unemployment or illness.
“We are, however, reassured by the industry’s enthusiasm to tackle these issues. It is vital that consumers receive proper financial advice when taking out these products and mortgage intermediaries are best placed to do so. This approach is key to ensuring consumers receive the correct levels of advice."
