New PPI rules important for brokers to understand
LV=, one of the leading insurance companies in Britain, has revealed that many brokers are unaware of the new Payment Protection Insurance (PPI) laws that come into effect from April 6th, 2012. Under Competition Commission legislations, brokers will now be unable to sell PPI products whilst selling a mortgage, making it important to individual’s taking out loans to ensure that these rules are followed through.
Under the new rules that come into force next month, mortgage brokers will only be able to sell PPI products after a seven day time period has passed from the time that a mortgage quote was given or the date on which a lender formally offering a mortgage loan. This will ensure that consumers have time to think about such insurance, and means that there can be no misselling of products by brokers indicating that PPI is mandatory for approval to go through.
However, in an LV= survey of 117 brokers, it was found that 28 per cent were not aware of the changes. Though 72 per cent had full knowledge that rules were coming into place on April 6th, 52 per cent did not understand what the new rules meant. Meanwhile, 71 per cent of the total group asked said that there was not enough guidance on the matter.
For consumers, the missold PPI scandal has raised awareness of the problems surrounding the protection. However, for those taking out a mortgage from April 6th, they must be aware that brokers can no longer attempt to sell cover at the point of sale of a loan.