As the FSA prepares to issue hefty fines to lenders mis-selling PPI, Stephen Clowes, managing director of Millennium Insurance, believes more needs to be done:
“The commoditisation of protection products – based on the cheapest price, not value for money – and poor sales practices are damaging to customers. There is a false perception that PPI doesn’t payout. Valid claims involving bad backs, mental illness, stress or nervous disorders are paid provided they are supported with the correct expert or medical advice.”
Referring to a recent Which? report highlighting confusing terms and conditions, dozens of products with different names, complex and lengthy underwriting procedures and exclusion clauses, Mr Clowes said he agreed the consequences of being sold the wrong protection product were just as severe as being sold the wrong investment product. Even when the right protection product is sold, it is vital the right cover and terms are in place, he said.
“Consumers should be aware that protecting their commitments is a good idea, especially if their financial situation were to take an expected temporary down turn, they do not have to take their lender’s own PPI. There are good quality standalone products out there. Insurers should stop commoditising financial protection so the only way the average consumer can buy is based on the cheapest price,” Mr Clowes added.
“Non-advised sales for protection products also needs to stop. The most important thing customers need to look out for when deciding if MPPI is right for them, however, is the basis of claims, not the price. We advise customers to ask two simple questions: Is it ‘Back to Day One’ or an ‘Excess Period’ basis of claim? Do I have to wait 30 or 60 days before my policy pays up?”
Mr Clowes said he would advise against taking any policy of this type which pays out after 90 days. The reason for this is straightforward – if you’re off work due to an uninsured event for say 45 days, a 90 day policy would pay zero.
All Millennium Insurance policies are 30 day wait ‘back to day one’.
Mr Clowes questions whether all sales staff are aware of the difference in cover and whether they would be deemed competent under FSA rules and regulations and if they are able to select the best policy for a given client.
Mr Clowes added: “Customers need, and deserve, straightforward, quality payment protection insurance that pays up when called on to perform. In our opinion companies should stop selling the cheapest premiums and start providing the client with the right kind of policy for them.”
