Payment protection insurance (PPI) – and secured loans for that matter – have often been seen as the poor relations of the general insurance and mortgage sectors respectively.
Given that they both generate multi-billion pound annual turnovers this is perhaps surprising, and fortunately things are starting to change and some interesting comparisons can now be made between the two sectors as they grow and evolve.
Both secured loans and PPI have been through some very difficult times of late and there are ongoing reviews taking place in the PPI market that have been keenly followed in the press.
In the past it has been all too easy to levy charges of poor value and poor practice at these markets and in some cases they have deserved these accusations.
Clearly no market ever gets things right 100 per cent of the time and the last couple of years have seen PPI and secured loan providers and distributors really think about the service and value they are offering and look to improve what the end client is receiving.
Creating a focal point
In the secured loan market, the appearance of a number of new master brokers has helped create a central focal point for brokers looking to access the market.
In the past, many have struggled to find their way to the most appropriate product and this has made it difficult for them to be confident that they had recommended the best deal for clients.
This is no longer the case and accessing the secured loans and associated insurances is easier than it has ever been. Not only has this come about through the introduction of more master brokers to the market, but also because of the IT solutions they have brought with them.
Mortgage brokers, for example, are able to use one of the systems run by master brokers to immediately search what the secured loans market has to offer, and there are varying degrees of functionality when it comes to filling in and submitting application forms.
On top of this, there are a host of changes coming into force with the alterations to the Consumer Credit Act, while the greater scope of regulation in the secured loans market will give more people confidence to use and explore it.
It has been suggested that regulation has gone too far and time will no doubt see certain parts of the regime trimmed back or amended to suit its purpose. However, the extension to the rules surrounding loans over £25,000 should improve confidence considerably.
Coming of age
In many ways the secured loans market has come of age and as it matures and develops further it will become even easier to use and give more confidence to those involved in it.
Similarly, the PPI market is going through a transformation and the improvements of each sector can only have a direct and positive effect on the other.
Because they work so closely, the choice, service, value and security each market offers clients has an impact on their overall impression of the two sectors taken as a whole. As both have improved, so has the customer and broker experience.
Technology has had a huge impact on the PPI sector and is making it easier for independent providers and distributors to get their services to market. One of the main issues in the current PPI market is that high-street banks and building societies dominate distribution.
As IT has improved it has become easier for new providers to come to market and for brokers to source and compare what they have to offer. In turn, this has created more choice for consumers and there are significant savings to be made in many instances.
No longer are brokers and borrowers simply relying on the insurance sold alongside their credit, but they are actively seeking alternatives because it has become easier and often cheaper to do so.
A tightly knit market
Despite the difficult times we have had to go through, it seems that now all of the different strands involved in the secured loans and PPI markets are being pulled together to create a more tightly knit and robust market in which consumers and intermediaries can do business.
Industry representation has improved and not only has PPI become a much higher priority for regulators, providers and distributors alike, but the secured loans market has also created a more dominant profile for itself. The inception of the Association of Finance Brokers has greatly helped in this.
PPI is a valuable part of our market and plays a significant role in helping customers face the difficulties that life can throw at them. Secured loans have also proved their worth many times over and they are coming into the foreground, rather than lurking in the shadows.
Both markets have endured their fair share of criticism and neither is perfect, but there have been some significant improvements made and in terms of accessibility, ease of use, security and value for money, both sectors offer brokers an excellent service.
