On BBC2's Working Lunch yesterday (Weds 10th Jan) there was an article all about how Banks and BS's are being investigated by the FSA over selling of Mortgage Payment Protection Insurance (MPPI).(posted 8505 days ago)What this is is a policy that protects you against things like redundancy, unemployment, long term sickness etc to cover the gap between loss of earnings and the 9 month time limit when the state will assist with mortgage payments. These policies are optional and normally arranged via the lender. Taking this into account you would think that there would be no problems. How wrong can you be!!!
Most policies that have been used so far DO NOT MEET THE FULL MORTGAGE PAYMENT and therefore create arrears if the borrower cannot meet the shortfall. As we all know, arrears mean the lender can repossess the property. In 47% of cases so far this is exactly what the lender has done even though it is the fsault of the insurance THEY sold you that the payment cannot be met. This is why they are being investigated. To me is appears they they have been negligent in selling the policy and it would be very interesting to see what happens if someone stood firm and took them to court.
I know this is not of help to most of us but I find it hopeful that the FSA is looking at the practices of the lenders and insurers. For once they may actually be held accountable for their careless and thoughtless policies/tactics.
The web site for Working Lunch is on the BBC main site but as yet they have not updated it for the programme shown yesterday.