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TMPE2019: Brokers putting PI at risk by failing to advise customers on protection – Simply Biz

  • 08/11/2019
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Advisers have a moral duty to fully inform customers about the need for protection insurance and are putting themselves at risk of professional indemnity claims if they fail to do so.


Speaking at Mortgage Solutions’ The Mortgage and Protection Event 2019, representatives from Auxilium Partnership, Mortgage Advice Bureau (MAB) and SimplyBiz agreed that ignoring protection was a risky situation for intermediaries.

Martin Reynolds, chief executive of SimplyBiz Mortgages, said if the adviser’s permissions covered mortgage and protection they have to advise on protection, if only to protect themselves.

“Because you’ve taken out professional indemnity (PI) on the option of being a mortgage and protection adviser,” he said.

“If you don’t talk about protection at all during that sale, you are leaving yourself open for a claim, and we live in a litigious society as we know.”

He added: “One you should be doing it to give the customer the best outcome, and two you should be doing it to protect yourself, to protect your business.”



Moral responsibility

This was echoed by Mark Graves, CEO of Auxiliam Partnership who said: “If you’ve got permissions to do it and you’re not doing it every single time then I think we’ve got a problem.”

He also warned there was a moral responsibility as well upon advisers.

“When you sit in front of a customer, it is your moral responsibility to put that customer in an informed position about the consequences of taking that mortgage with you without any protection cover,” he said.

“You should explain to them the different options they have that you can help within that property, and if you aren’t comfortable doing it then you can find someone to work with who has that skill set.

“But that’s your moral responsibility.”

Graves added that if a customer then decided not to take out protection from that informed position, he would get them to sign to confirm they have not taken the advice recommendation.


Duty of care

Gareth Herbert, sales director of Mortgage Advice Bureau, agreed, noting that most business cards say mortgage and protection adviser.

“I would challenge people what aspect of that do you not do? Mortgage, protection or the advice part?” he said.

“At the business card stage you should be setting out what you’re about, making sure you can keep that client in that property no matter what happens.

He continued: “I’ve been involved in protection for 30-odd years, but I still find it embarrassing how many times I see the customer has not had the option to say no.

“If you don’t set your stall out properly as a mortgage and protection adviser, my view is you’re selling that customer short, and I think we have a duty of care to make sure clients are protected correctly.”


Registration is still open for the free to attend events in London on 12 November and Southampton on 13 November.

Follow the link below or click here for more information and to register.


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