Mortgage PPI question...

davidgmmafan

Quite a simple one really, there is a lot of media attention regarding PPI mis-selling. There are even companies touting for business on radio, but they only seem to refer to loans and credit cards.

Does this also apply to mortgage payment protection? It would seem to be the same principle and potentially much more damaging if you weren't covered because the policy wasn't suitable.

Is there something that means it doesn't apply to mortgages? And if not why isn't it mentiond by companies?

My guess is card and loan claims a re a slam dunk, like credit card fees, and they maybe don't want to work involved in a mortgage claim.

Any thoughts welcome.

di3004

Hi there

I'm sure Dunstonh will give some good info/advice for you on this one, good luck.

roonaldo

The sales process is different on MPPI. An advisor usually would of carried out a fact find, so you cant go down the route of saying they did not check the suitability of the product.

Also if its monthly paid, then you have almost no chance in reclaiming as theres nothing wrong with a monthly policy (as opposed to single premium where the premium is put on mortgage and therefore incurs interest.)

When did you take it out? with who? and how did you pay it?

jjr197

In theory, the fact finds should ensure that PPI was not mis-sold, but the reality is very different!

My other half has had a successful MPPI claim where she was paying a monthly premium.

Jimi

dunstonh

You can complain about any financial product out there. So, you can complain about MPPI. However, statistically the odds of success on a complaint about MPPI are far lower.

If eligible for cover, have a financial need and paying monthly, then the chances of success are near zero where you used an adviser. Single premium is the main area where there has been success or where an adviser wasnt used but a clerk (so little or no audit trail exists).

I believe that £40 million has been repaid in MPPI so far. However, that is very small in comparison to loan/credit card and probably the bulk of it comes from single premium.

davidgmmafan

"An advisor usually would of carried out a fact find, so you cant go down the route of saying they did not check the suitability of the product."

If this is true how could it be the case that, nothing having changed, my brother was told he was not covered?

I don't have all the facts, but I wasn't aware of any difference between that and other forms of PPI (figured there would be some though).

It was with Natwest whom the current account was also with, massive charges on that too

dunstonh

If this is true how could it be the case that, nothing having changed, my brother was told he was not covered?

I dont know. Maybe it wasnt an adviser but a clerk that was used. Maybe the adviser didnt ask the required questions and didnt have a factfind to prove it (quite possible in older cases which never required the information to be held - hence why the banks are arguing against retrospective rulings by the FSA).

I don't have all the facts, but I wasn't aware of any difference between that and other forms of PPI (figured there would be some though).

There isnt really apart from distribution. A financial adviser is unlikely to have ever been involved in loans and credit card PPI. The only one they are likely to have been involved in is mortgage PPI. That doesnt mean the adviser has is always right. Just that statistically the odds are quite low that it will be successful.

It was with Natwest whom the current account was also with, massive charges on that too

Many of the banks dont use advisers for mortgages. Banks love using the words "adviser" or "manager" in the job titles but that doesnt mean they carry the regulatory burden that a real adviser has. There have been many calls over the years to get the FSA to rule that "adviser" can only be used where the person is a real adviser and not tagged onto other job titles to give a false impression. They are effectively bank clerks filling in forms and following a sales process rather than an advice process. Most consumers wouldnt know there is a difference given the way sales firms try to hide it. IFAs handle the majority of regulated advice cases (over 65%) but have under 2% of complaints at the FOS. Banks handle a minority of regulated advice cases but have over 50% of complaints at the FOS. So, distribution channel is often key to the likelihood of mis-sale.

davidgmmafan

It was the mortgage advisor in branch, I think I'll dig a little deeper.

I'm not very up on it so when I mentioned it briefly when looking at the bank charges issue their reply was similar to some of the things you are saying.

Basically suggesting the bank couldn't possibly have done anything wrong as they took the info from the customer. Well the info hasn't changed and the customer wasn't covered. Even if we're generous and say they're not 100% to blame should they get off scot free?

dunstonh

The bank should have the information though. They have the mortgage application which contains the vast majority of what is required for a general protection factfind for needs analysis. I have just looked it up and can confirm that Natwest use sales reps providing tied advice for mortgages unless the product was bought standalone (i.e. over the counter). So, assuming no errors by the mortgage clerk then they should have enough on file to justify the sale. As I said, that assumes no errors. Banks are prone to put sales before advice.

davidgmmafan

It was definately done by a proper mortgage person (whatever they call them) in a meeting room.

The banks position is pretty much we cannot have done anything wrong as the polciy had terms and conditions etc. Whereas the logical position seems to me the person is trusting what the bank says, and if the MPPI HAD done it just there would've been very much less charges on the bank account (and mortgage) and the situation wouldn't have been as deperate.

As it stands they have the best of both worlds. Commission for selling a policy which had no benefit to the customer. Just seems basically wrong to me.

roonaldo

davidgmmafan wrote: »

Commission for selling a policy which had no benefit to the customer.

Why is it of no benefit to the customer? Many people successfully claim on them after being made redundant, sick etc. I have.