Amid all blows chest and promotion, some clarity is desperately needed. Without relevant PPI being offered to customers, there is a greater risk of one of the fundamental objectives of the FSA is not fulfilling - and that is consumer protection interests.
The PPI witch hunt has also grouped together pay the mortgage and insurance protection single premium ASU. These products are, of course, all very different. Most of the Office of Fair Trading, concerns re-concerned about the possible errors of the sale of PPI in connection with consumers and sales of revolving credit, not mortgages.
In November 2005, the FSA published a report detailing its findings regarding the sale of PPI. This was backed by a different mystery shopping companies involved in the sale of PPI - which goes beyond mortgages to other companies that offer revolving credit lines, accounts for stock and unsecured loans. It was much broader than the mortgage industry alone and, taking into account the mortgage industry has been regulated by the FSA for some time, has taken a disproportionate amount of flak.
Experience
It does not strike me as strange that people who have very little experience in the mortgage market - and more specifically the experience of sub-prime mortgage market - have been pontificating about the evils of so-called single premium ASU.
The mortgage industry as a whole needs to assess the risks and benefits - yes, benefits - from single premium ASU calmly heads, because things have moved on.
Fact. Sub-prime customers cancel their monthly ASU policies. Some major insurers have withdrawn the proceeds of the sale because the persistence, the levels are so low. That& 39;s what sub-prime customers. It& 39;s the same reason they cancel their life insurance policies. That does not mean we should stop writing life business, as it would withdraw from the clients and their families exposed.
There is a fundamental issue here. Why sell to a customer per month, when the policy has a proven track record of not being able to meet its monthly commitments? And guess what? Done two sub-prime customers cancel their monthly ASU policy at the time they need it most. The potential ramifications for the IFA / broker mortgages are harmful if they would not be able to demonstrate that he gave his client the option of either monthly or single premium ASU and subsequently ha ido pear-shaped for client.
Some corridors detail the costs and benefits of ASU in the suitability letter and the writing that if the client has chosen not to consider it. Some go even further. For customers who cancel their policies below, some brokers to send a disclaimer assuring that they know what they are cancelling and detail the consequences of not having cover.
It is cheaper to make the risk of potential attract a lawsuit, and worse still drawing bad press for our business and brand. There is no doubt that ASU single premium policies have reached some major flak because of their flexibility and poor TCF unfriendliness.
Commission
Agreed and rightly so. One of the main issues at stake here is the apparently high commission payments for single premium ASU.
Let us see this issue in another context. What happens if a motor insurance offered by a period of three years and the product does not warrant the change in prices over the term non-inflationary creep? What if you have a new discount for payment in advance that the policy as a lump sum? Of course, the selling broker to pay their share of the total premium premium.
Single ASU is not really that different, it is fair that a lot of commentators are all so bent on the commission payment and not the cover.
This problem has been reinforced by a lot of people pulling its currency by two pence in the ring when, to be honest, we need objectivity and recognition of what has changed. There is a place for single premium ASU, but not what we used to know whether it.
What the mortgage industry had a single premium product that ASU had the following characteristics:
-provided they do not quibble pro-rata refund if cancelled -- -- When the premium was established through a matrix of risk taking into account the age and type of employment - similar to the way life premiums are calculated - where you can sell the accident, sickness and unemployment components independently of one another based on customers & 39; individual circumstances - a product that can factor in customer savings and protection policies of their employer to reduce the cost of the policy in line with the risk - where can defer payment of benefits for a maximum of six months and will be paid afterwards in a lump sum - where you can change the policy in the medium term, in other words, the amount of coverage can be increased or decreased or names on the policy can be changed without penalty, and - if the true cost including capitalized interest of the single premium ASU is disclosed before purchase - to comply with treating customer fairly and Code of Insurance Companies 5 rules. In fact, all limitations of the product, pre-existing conditions and exclusions itself known whether there before purchase.
What this product and its creators have worked closely with a selection of players in the mortgage industry to ensure all requirements regulatory were met and exceeded?
Well, hate to say it but that is the product of a corridor that has sold - and the intermediary has FSA their views and, as with others, single premium ASU and their sales were heavily controlled. There are no problems. Maybe some of the single premium ASU suppliers may wish to read the previous product features only one more time.
Protected
Let us to see another angle. Without doubt, lenders, particularly sub-prime lenders, have a duty to ensure that the needs of their customers are protected. The stated goal of many in the mortgage industry is to ensure its sub-prime customers are cleaned " credit ". Therefore, without any coverage, which will miss a mortgage payment or two or three and are stuck with sub-prime rates for a year or two. Suddenly that single premium ASU premium is not looking so expensive.
Things can and do go wrong, and it is our job as professionals to ensure our customers& 39; needs are protected.
The association of Intermediaries mortgage has already responded to the FSA & 39; S request to address their concerns about PPI and I am sure that will be the beginning of something more than sanity in the debates surrounding its sale. ASU single premium is not depredando desperate to customers. An agent has developed a process that is the FSA and TCF compatible and sells products that are tailored to individual needs. There is no doubt that the negative publicity surrounding sales PPI has not only eroded consumer confidence, but confidence IFAs and mortgage brokers to sell insurance coverage that few could argue against.
Most all, it is important noted that the industry has responded and advanced. Some people need to move it.
John Smith writes articles for blackandwhite.co.uk loans and mortgages, offering bad credit loans.
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