He said “While there has been much mutual backslapping over the demise of the old style of PPI policies, unfortunately the whole process has completely undermined confidence in this vital area of protection in the minds of advisers and customers. So at a time when people really need the security of a policy that will help pay mortgages or loans in the event of redundancy or illness, at Loan Options we are seeing more evidence every day that protection is not being taken up by customers.”
Loan Options, which operates a whole of market lending panel, is worried that unless there is a concerted campaign to alter perception, intermediaries will not feel confident enough to recommend PPI and clients will opt out. However, Andy Moody sees a collaborative role for both the regulators and product providers.
He said “Ideally, even though secured loans are not yet directly regulated, the FSA could be an agent for providing proactive leadership in helping to set TCF blueprints in the area of product design, rather than just concentrating on the selling process. Clearly, one of the main problems in the past has been the unhealthy reliance by lenders and some intermediaries on commission to the detriment of premiums and policy benefits. It is going to take a major shift in emphasis to make tomorrow’s policies as transparent as other financial products, with easily understandable benefits linked to affordable premiums and simple acceptance of proof of illness or unemployment. Product providers working with the industry and the regulator could provide the kind of products that advisers will be confident enough to recommend.