FSA tackles shifting MPPI terms

by Gill Montia

Story link: FSA tackles shifting MPPI terms

The Financial Services Authority (FSA) has announced that it has developed an industry-wide package of measures in conjunction with Mortgage Payment Protection Insurance (MPPI) providers, which will result in consumers receiving refunds totalling around £60 million.

According to the regulator, the industry has acted in response to its concerns over recent increases in premiums and reductions in MPPI cover.

These concerns centred on the terms permitting such changes, and how clearly the terms were disclosed.

Following discussions initiated by the FSA with relevant trade bodies and some firms, the industry has responded positively by agreeing to:

Proactively refund increases in premiums, and reverse any reductions in cover, for customers who have experienced these changes to their policy in 2009;

Offer to reinstate policies where a customer had cancelled it 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 and amend MPPI contracts to ensure that all customers are made aware of the circumstances in which firms have the right to vary premiums and cover.

The FSA’s managing director of supervision, Jon Pain, says: “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.”

He adds: “It will also give all MPPI customers clarity about when and why firms will be able to vary these in future.”

Firms will contact customers if their policy is affected, and will make all refunds by the end of June 2010.