Should mortgage protection be compulsory?

David Hollingworth, head of communications at London & Country

This is a question that does tend to crop up on a regular basis.

There is certainly an argument that can be made for a return to the days of mandatory protection.

It would certainly counter the reduced penetration levels of the current protection market, which would help reduce the number of borrowers that are so poorly protected should the worst happen.

However, I think it is difficult to make a move back to a market where borrowers are compelled to take protection after that requirement has been removed.

It also poses a lot of questions about what would be deemed an acceptable level of protection and what form that should take.

There is a need for a much more rounded conversation to take place around protection and which products would suit the client's individual circumstances.

For example, should we insist that the young, single first-time buyer with no dependents should be compelled to take level term assurance to cover their mortgage? Might that only prevent a further, more constructive conversation around income protection and critical illness?

Although a return to compulsion would certainly make life easier for advisers to sell protection products, everything is geared more to the education of consumers about the need to protect and the product suite that is open to them.

Broker focus on protection has improved significantly from the peak of the market and it is important that continues even when the mortgage market improves.

The improved processes that are undoubtedly now in place should develop customers understanding of the need to take protection seriously and initiatives, such as Aviva's recent campaign, will help.

If anything is to be made compulsory, perhaps it will now need to be around the broker ensuring that the client has been made fully aware of the need to consider the protection of their mortgage and the possible ramifications if they don't.