The FSA has announced that it has reached agreement with Mortgage Payment Protection Insurance (MPPI) firms on an industry-wide package of measures for consumers that includes approximately £60m in refunds.
The FSA had expressed concerns about terms in customers’ policies which permitted the insurers to unilaterally increase premiums and reduce cover, and the lack of clarity in the disclosure of those terms.
Following discussions between the FSA and relevant trade bodies and some individual firms, the MPPI industry has agreed to:
- Proactively refund increases in premiums, and reverse any reductions in cover, applied during 2009.
- Offer to reinstate policies cancelled by customers within two months of an increase in premium or reduction in cover made during 2009.
- Freeze premiums and cover for existing customers for at least the remainder of this year.
- Amend MPPI contracts so that all customers are made aware of the circumstances in which firms have the right to vary premiums and cover.
Jon Pain, managing director of supervision at the FSA, said:
"The FSA welcomes this positive move by MPPI firms to reverse recent changes in premiums or cover which will put affected customers back in the position they were in before the policy was changed. It will also give all MPPI customers clarity about when and why firms will be able to vary these in future.
This clarity will provide the basis for MPPI to remain a valuable option for many mortgage customers who wish to take out protection, alongside the mortgage commitment they are taking on."
View FSA and firms reach agreement on MPPI, 7 October 2009