Protecting the biggest purchase a person is likely to make should be a key decision. Owain Thomas asks whether mortgage payment protection insurance is still a worthwhile option.
The payment protection insurance (PPI) mis-selling scandal has been hitting headlines for several years now.
But with the major high street banks finally ending their opposition to regulators' intervention, the issue is now approaching closure.
When combined with the incoming Competition Commission (CC) rules surrounding the sale of such products, it seems the market will face a more regimented structure in the future.
While this remedial action was largely necessary to correct the poor operation of the single premium loan and credit card PPI markets, it also captured a somewhat unwitting victim mortgage PPI (MPPI).
The product has many fans and has been consistently noted by advisers as a good contract providing valuable protection.
But there are fears now that its reputation has been tarnished too much by its association with other PPI plans.
As Martin Sincup, protection product manager at LV=, explained, the Competition Commission targeted short-term PPI-style contracts, not long-term contracts such as traditional life, critical illness (CI) and income protection (IP).
And he warned the new rules - which will include a ban on the immediate sale of PPI to people when they apply for credit cards or loans and come in on 6 April next year - will significantly affect brokers dealing with these products.
"The biggest area that's going to impact advisers will be the point-of-sale prohibition restricting when you can sell these PPI-style products," he said.
"The CC wants it to be more separate, so you have to wait seven days after formally having a mortgage offer before discussing PPI, which means using things like a diary system.
"It's going to have quite a big impact on brokers and I'm not sure how many advisers actually understand it. It is 54 pages of legislation, but how many understand it and have started looking at what they need to do?
"So, pretty much every adviser firm around the country is going to have to look at their current processes around how to sell the product and how to deal with it," he added.
Understandably, with these incoming restrictions and the recent sales levels of MPPI mirroring the nosedive of other PPI products, many in the market are downbeat about its future prospects.
Sincup recognises this view and has concerns of his own.
"MPPI has dropped off already and I think the trend is not likely to reverse," he continued.
"We'll probably see the emergence of simpler IP-style products to be sold by comparison websites to take advantage of consumers being encouraged to shop around. And one of the interesting things is providers will have to publish claims statistics for PPI.
"There's quite a lot for providers to get to grips with and we might see a few decide the market is not big enough to do it," he added.
RE-SELLING CHALLENGES
Stuck in the middle of this new regulatory burden are the advisers and mortgage brokers who will now have to take a long hard look at their sales process to ensure compliance.
However, despite this major overhaul, many are not put off by the new rule structure and suspect it will not affect their standing toward the product.
Andrew Frankish, managing director of Mortgage Talk, has been watching the drama unfold, but being an authorised representative has yet to take any action, preferring to wait for details to be passed on from Legal & General.
"We still see MPPI as an essential product, but there's no question that we need to do more explaining to consumers of what it is," he said.
"The mis-selling has had a knock-on effect with the consumer. But once we explain exactly what this product is for and how it can be used properly, it's still actually quite a big priority.
"Addressing the changes is a matter of processes and we have quite a large admin team that support the advisers, so they could simply diary in to make sure the customers are fully informed of what's happening," he added.
Many of those caught in the periphery of the PPI debate have been seeking an end to the hostilities in the hope of rescuing what little remained of the market.
