Credit waiver products a flexible option - Protection Products

While agreeing "wholeheartedly" with British Money's lobbying that lenders should do more to provide meaningful protection to their borrowers, the protection providers statement yesterday that credit waiver products "have restrictive payment exclusion periods and no unemployment cover" has been disputed.

Roger Humber, CEO of waiver firm Protection Products, said: "In its simplest form, waiver is a promise from the lender to the borrower to cancel payment if an event occurs. That can be any event that the lender wants......including unemployment cover no less."

He pointed to one of the longer running waiver schemes in the market, the Peugeot Citroen Payment Waiver, launched in January 2011, which provides for unemployment protection, whose only meaningful ‘exclusion' is that the unemployment must be involuntary.

He added: "The lender chooses what trigger events to include, how long to waive payments, and what exclusions (if any) to apply.

"Given that the borrower has already met the lenders credit underwriting criteria, many of the exclusions one might typically see in a stand-alone insurance product are gone, because they've already been met, so rather than more exclusions there are normally very few with waiver.

"We are all agreed that lenders should do more to protect borrowers in the event of unforeseen circumstances. How best to do that is up for debate, and whether the Government will ever make some form of protection mandatory is yet to be seen, although we will continue to press for this with the suggestion that a waiver promise is by far the easiest way forward with the lender in complete control of what the protection looks and feels like. "

Later this quarter Protection Products, in conjunction with CUNA Mutual, is intending to go live with the first mortgage lender to offer an integral waiver feature.