A second PPI mis-selling scandal is on its way
Aleaxander Burgess is a director of British Money
A number of statistics have come to light confirming the extent of the protection gap now facing borrowers and the likelihood of further compensation claims if this issue isn’t addressed by lenders.
British Money’s investigations reveal only 2.7% of people taking out new mortgages and 5.4% of existing borrowers have protection plans. With over 1.26million loans advanced to first-time buyers, those moving up the property ladder and re-mortgagees last year, it’s frightening to think 1.2million have no financial support mechanisms to prevent them falling into arrears.
When new mortgage borrowers were asked why they didn’t purchase unemployment cover; 46% said it was not discussed or offered to them by their lender, so they didn’t know it was available, 27% believed the State would protect them and 24% would not buy a policy due to its tarnished reputation. This leaves around 3% with financial protection.
Claims management firms believe mortgage lenders who fail to discuss or offer PPI or obtain an acceptable disclaimer, evidencing their cover options were rejected, leave themselves wide open to compensation claims. When British Money asked claims management companies to identify the next financial services mis-selling scandal, ironically 79% suggested lenders who fail to discuss or offer protection plans. This they say, shows lenders are not acting prudently.
As well as leaving themselves wide open to further claims, doesn’t this breach their duty of care responsibilities and contravene the Financial Conduct Authority’s Mortgage Market Review guidelines? Surely customer focus is not just about scrutinising borrowers’ financial situations, but offering debt prevention measures