According to the director of AMI, Chris Cummings, while the FSA has graded mortgages as having a greater risk potential then GI the Financial Ombudsman Service (FOS) believes that GI actually carries the greater risk of mis-selling.
He said: “While most brokers have done an excellent job preparing for mortgage regulation, their preparations for GI may have been put on the back burner.”
Cummings pointed out that the FOS was as likely to have to rule on an insurance complaint as a case of mortgage mis-selling. “The sale of one will normally go hand in hand with the other,” he said.
The FOS claimed it did not grade any financial products as inherently more risky then any other.
Spokesperson, Alyson Hoyland, said: “Basically we react to complaints as they come in, we don’t necessarily expect more serious complaints to come from one product then another.”
However she conceded there was a possibility of a greater number of complaints originating from the sale of GI products simply because of the number of different products available.
“There are many more GI products sold then mortgages, so from that perspective there could be a greater number of complaints,” she explained.
David Quick, managing director of general insurance network CETA, commented: “The vast majority of GI disputes occur as a result of claims - policyholders usually believe they are due more money than an insurer is willing to pay out.
“The reality is, however, that most GI sales are usually fairly straightforward and don't represent great opportunities for mis-selling. I fail to see how the sale of a motor, house contents, pet or holiday insurance policy can rank above a mortgage in terms of risk.”
