Lib Dems demand mortgage protection
02 July 2004
The Liberal Democrats are calling for mortgage payment protection insurance to be offered as standard for all new mortgages.
The party's shadow chancellor, Vince Cable, has attacked the current system saying banks, building societies and other mortgage lenders should offer payment protection insurance as standard practice.
He feels customers should be given the option to 'opt out' only after receiving specific guidance by mortgage advisers on the risks of choosing to remain uninsured.
Dr Cable said standard mortgage payment protection insurance "would be in the best interests of consumers in light of continuing uncertainty over the future of the housing market."
Dr Cable additionally feels the government should properly regulate the mortgage insurance industry with safeguards for consumers against ridiculously priced or pointless policies that fail to pay out when people face difficulties.
He continued by saying: "Many of the insurance policies on the market today are too expensive, contain too many exemptions in the small print, and do not best serve consumers."
He went on to point out: "There is uncertainty over house prices. In this environment, it should be standard practice for mortgage lenders to offer high quality payment protection insurance to those taking out new mortgages, or indeed to existing customers who wish to take out insurance retrospectively. "
"There should also be industry-wide agreement to help those who fall into payment difficulties with flexible mortgage payment arrangements in order to avoid losing their homes."
Dr Cable concluded: "It is in the industry's interests to prevent a slump in the housing market, and in the Government's interests to regulate mortgage insurance in a way that benefits consumers."