Alexander Burgess is a director of British Money
I want to talk about using PPI as a risk conduct and compliance mechanism to evidence Treating Customers Fairly.
I am becoming increasingly concerned about the apathy that appears to be rife within the mortgage and loan sectors for bringing new payment protection products to market, thus there is neither any inclination to reduce the ever-increasing protection gap nor dampening accusations of irresponsible lending.
Borrowers can be forgiven for their cynicism but without such measures in place, lenders expose themselves to regulatory, reputational and media scrutiny because they are not reducing avoidable delinquency.
Payment protection insurance is a proven risk conduct and compliance mechanism, which provides lenders with the evidence required by the regulators of responsible lending and TCF, as well as delivering the following key benefits:
• It reduces delinquency rates and mitigates the risk of bad debt.
• It evidences a commitment to treat customers fairly through our risk conduct reporting protocol.
• It reduces the cost of capital under the proposed BASEL III accord and the EBA’s new Technical Standards & Regulatory Technical Standards procedures.
• It ameliorates the risk of accusations of inappropriate lending and customer exploitation.
• It ensures borrowers have access to an effective financial support mechanism.
Those lenders who take the initiative, face a win-win scenario and will not only benefit themselves but also their customers, both now and in the future.