A lack of recognition of financial advisers is exacerbating the problems in the payment protection insurance (PPI) arena, according to the Association of Mortgage Intermediaries (AMI).
The AMI says mortgage advisers offer the best avenue for consumers to find the most appropriate deal for PPI and mortgage payment protection insurance (MPPI).
The Association has spoken out following a damning report published yesterday by the Competition Commission, which ultimately suggested selling PPI at the point of sale of another product should be banned.
Richard Farr, AMI director, says intermediaries have a key role to play in advising consumers about an important insurance product.
“We believe that the important role of intermediaries in the advice process has not been fully recognised.
“We believe that the MPPI market works for consumers and delivers good value products which are supported by good quality product literature.
“We acknowledge that there is work to be done in the wider PPI market in terms of clearer information for customers and provision of claims data.
“However, we believe there should be greater recognition of the role of intermediaries in shopping around to find the consumer the best deal.”
Farr adds the Association is concerned any changes to the rules regarding selling PPI should “not be so onerous as to reduce consumer’s access to MPPI”.
“In a time of increasing economic uncertainty we are anxious that access to protection – and independent advice – is the overriding priority,” he says.
“We caution against solutions detrimental to consumer protection.”
The CC report said most of the UK’s 14 million PPI policies are sold at the same time a consumer takes out a loan, and argues consumers are unaware they can buy the products from other providers.
It says this makes it difficult for other providers to reach these customers, adding that, in the absence of such competitive pressure, distributors such as banks, mortgage providers and credit card providers are able to charge higher prices.
Competition Commission deputy chairman, Peter Davis, said: “We've found serious problems with the PPI market and customers are paying for the lack of competition.
“The way PPI is sold as an ‘add-on' to a loan or other credit product means distributors escape the pressure they should face from competing suppliers.
“Distributors don't appear to compete much with each other on either price or quality of PPI; neither do they appear to do much direct advertising of PPI to win customers from each other.”
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