The Financial Services Authority has revealed a number of new measures for the mortgage payment protection industry, aimed at improving customer experience and fairness.
Acting on concerns raised by the treatment of customers in the MPPI industry, the FSA has moved to reverse recent increases in premiums and reductions in cover, which could see consumers refunded to the tune of £60million.
The FSA has made an industry-wide agreement with mortgage payment protection insurance firms to introduce the new measures, which focus on the terms in place that allow firms to change the premiums and cover of a policy, and how clearly these terms are explained to the consumer.
The industry has agreed to refund increased premiums by the end of June 2010 and to reinstate any withdrawn cover for customers who have experienced such changes to their policies in 2009.
Firms will also offer to reinstate policies for customers who cancelled them within two months of experiencing an increase in premium or reduction in cover, and have promised to freeze premiums and cover for existing customers, at least until the end of the year.
MPPI providers will also be amending customers' contracts so that they are made aware of the circumstances in which their premiums or protection could be changed.
Commenting on the new rules for the mortgage protection industry, Jon Pain, managing director of supervision at the FSA, said that the regulator "welcomes this positive move," which will "put affected customers back in the position they were in before the policy was changed."
"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," he added.
Emma Walker, head of protection at moneysupermarket.com, said that the news will be "most welcome" to those who "want to take responsibility for their finances effectively" in the current economic climate, which has left many people jobless and unable to keep up with their mortgage repayments.
Ms Walker also hopes that the new measures will prevent some from cancelling such policies when they might need them the most.
© Fair Investment Company Ltd
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