Mortgage payment protection (MPP) policies require further standardisation if borrowers are to be provided with adequate protection, according to a Somerset-based broker.
Despite the Government, in conjunction with the Association of British Insurers (ABI) and the Council of Mortgage Lenders (CML), introducing benchmark standards for MPPI, Brian Humphreys, managing director at 1 to 1 Mortgages, said more standardisation is required to ensure all lenders’ policies are available on a standalone basis. According to Humphreys, failure to recommend a standalone policy can leave borrowers without vital protection when they remortgage.
He said: ‘All policies have clauses stating, ‘we will not cover you for pre-existing medical conditions’. If someone is fit or unfit and they move their mortgage, they have the right to take their policy with them.’
Richard Riding, chief executive at Payment Shield, said: ‘You should ensure continuity is available on your policy. If the policy is restricted to a particular mortgage, clients should look for an alternative portable policy.’
The issue of portablility is not covered in the baseline specifications of MPPI and although the benchmark standards cover terms and conditions for products, there will always be some products which are not available on a standalone basis.
Bernard Clarke, communications manager at CML, said this is because some providers offer alternative deals with their policies.
He said: ‘They offer dis-counted rates, for example, and you would not expect this discount rate to be transferable to another lender. Another factor is that some lenders offer extended periods of cover which may not be transferable. For these reasons they cannot offer full portablility.’
An example of an MPPI policy which is not standalone is Bristol & West’s Income Sure plan. The policy only applies to the Bristol & West mortgage, so if a client wants to move house, or remortgage their existing home with another provider, they are unable to keep their policy.