| THERE has been so much written in the
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| | that policy upfront as a lump sum? Of
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| past few months about payment protection
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| | course, the selling broker would be paid
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| insurance it has all become a little
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| | his share of the total premium.Single
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| confusing. Most of what has been written
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| | premium ASU is not really that different;
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| has been very negative, indeed
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| | it is just that a lot of commentators
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| dangerously negative - witch-hunt
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| | have got all bent out of shape about the
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| proportions even in some quarters. A
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| | commission payment and not the cover
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| mortgage magazine even ran a campaign to
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| | itself.This problem has been further
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| have single premium accident, sickness,
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| | magnified by lots of people throwing
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| unemployment banned.Amid all the chest
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| | their twopence into the ring when, to be
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| beating and promotion, some clarity is
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| | frank, objectivity is needed and
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| desperately needed. Without relevant PPI
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| | recognition of what has changed. There is
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| being offered to customers, there is an
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| | a place for single premium ASU, but not
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| even greater risk of one of the
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| | as we used to know it.What if the
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| fundamental objectives of the FSA not
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| | mortgage industry had a single premium
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| being met - and that is protecting
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| | ASU product that had the following
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| consumer interests.The PPI witch-hunt has
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| | features:- provided no quibble pro-rata
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| also lumped together mortgage payment
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| | refunds if it was cancelled;
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| protection insurance and single premium
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| | - where the premium was established
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| ASU. These products are, of course, all
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| | using a risk matrix factoring in age and
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| very different. Most of the Office of
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| | employment type - similar to the way life
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| Fair Trading's concerns re- volved around
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| | premiums are calculated;
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| the potential mis-selling of PPI related
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| | - where you can sell the accident,
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| to consumer and revolving credit sales,
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| | sickness and unemployment components
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| not mortgages.In November 2005, the FSA
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| | independently of one another based on the
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| published a report detailing its findings
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| | customers' individual circumstances;
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| about the sale of PPI. This was backed up
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| | - a product where you can factor in the
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| with mystery shopping of various firms
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| | client's own savings and existing
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| involved in the sale of PPI - that goes
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| | employer protection policies to reduce
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| beyond mortgages to other companies that
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| | the cost of the policy in line with risk;
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| offer revolving lines of credit, store
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| | - where you can defer the benefit
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| accounts and unsecured loans. It was much
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| | payments by up to six months and be paid
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| broader than the mortgage industry alone
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| | retrospectively in a lump sum;
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| and, given the mortgage industry has been
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| | - where you can change the policy
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| regulated by the FSA for some time now,
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| | mid-term, in other words the amount of
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| it has taken a disproportionate amount of
| |
| | cover can be increased or decreased or
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| flak.ExperienceIt does strike me as odd
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| | names on the policy can be changed
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| that people who have very limited
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| | without penalty; and
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| experience in the mortgage market - and
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| | - where the true cost including
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| more specifically experience in the
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| | capitalised interest of the single
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| sub-prime mortgage market - have been
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| | premium ASU is disclosed pre purchase -
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| pontificating about the so-called evils
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| | to comply with treating customer fairly
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| of single premium ASU.The mortgage
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| | and Insurance Code of Business 5 rules.
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| industry as a whole needs to assess the
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| | Indeed, all the product limitations,
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| risks and benefits - yes, benefits - of
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| | pre-existing conditions and exclusions
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| single premium ASU with calm heads,
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| | are disclosed pre-purchase.What if this
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| because things have moved on.Fact one.
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| | product existed and its makers had worked
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| Sub-prime clients cancel their monthly
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| | closely with selected players in the
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| ASU policies. Some major insurers have
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| | mortgage industry to ensure all
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| even withdrawn the product from sale
| |
| | regulatory requirements were met and
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| because the persistency levels are so
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| | exceeded?Well, I hate to say it but that
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| low. That is what sub-prime clients do.
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| | is the product that one broker has sold -
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| It is the same reason they cancel their
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| | and the intermediary has their FSA visits
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| life policies. That does not mean we
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| | and, as with others, single premium ASU
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| should stop writing life business because
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| | and its sale processes were heavily
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| we would be leaving customers and their
| |
| | scrutinised. No problems. Perhaps some of
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| families exposed.There is a fundamental
| |
| | the single premium ASU providers may wish
|
| issue here. Why sell a client a monthly
| |
| | to read the above product features just
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| policy when he has a demonstrated history
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| | one more time.ProtectedLet us look at
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| of not being able to meet his monthly
| |
| | another angle. Surely lenders,
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| commitments?
| |
| | particularly sub-prime lenders, have a
|
| And guess what? Fact two: sub-prime
| |
| | duty of care to ensure that their clients
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| clients will cancel their monthly ASU
| |
| | needs are protected.
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| policy at the time when they need it the
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| | The stated objective of many in the
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| most. The potential ramifications for the
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| | mortgage industry is to ensure their
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| IFA/mortgage broker are dire should he be
| |
| | sub-prime clients are "credit
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| unable to demonstrate that he offered his
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| | cleansed".So without any cover, they miss
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| client the option of either monthly or
| |
| | a mortgage payment or two or three and
|
| single premium ASU and it has
| |
| | they are stuck with sub-prime rates for
|
| subsequently gone pear shaped for his
| |
| | another year or two. All of a sudden that
|
| client.Some brokers detail the costs and
| |
| | single premium ASU premium is not looking
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| benefits of ASU in the suitability letter
| |
| | so expensive.Things can and do go wrong,
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| and document in that letter if the client
| |
| | and it is our job as qualified
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| has chosen not to take it up. Some go
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| | professionals to ensure our clients'
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| even further. For clients who cancel
| |
| | needs are protected.The Association of
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| their policies downstream, some brokers
| |
| | Mortgage Intermediaries has now responded
|
| send a disclaimer ensuring they know what
| |
| | to the FSA's request to address its
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| they are cancelling and detail the
| |
| | concerns about PPI and I am sure that
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| ramifications of having no cover.It is
| |
| | will be the start of some more sanity in
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| cheaper to do that than risk the
| |
| | the discussions surrounding its
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| potential of attracting a lawsuit, and
| |
| | sale.Single premium ASU is not about
|
| worse still drawing bad press to our
| |
| | preying on desperate clients. One broker
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| business and brand.
| |
| | has developed a process that is FSA and
|
| There is no doubt that single premium
| |
| | TCF compliant and sells products that are
|
| ASU policies have come in for some major
| |
| | appropriate to individual needs.There is
|
| flak because of their poor flexibility
| |
| | no doubt that the adverse publicity
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| and TCF unfriendliness.CommissionAgreed
| |
| | surrounding PPI sales has eroded not only
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| and rightly so. One of the key issues at
| |
| | consumer confidence but the confidence of
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| play here is the seemingly large
| |
| | IFAs and mortgage brokers to sell
|
| commission payments made for single
| |
| | insurance cover that few could argue
|
| premium ASU.Let us look at that issue in
| |
| | against.Most of all, it is important to
|
| another context. What if a motor insurer
| |
| | note that the industry has responded and
|
| offered a three-year product and
| |
| | moved on. Some people need to move with
|
| guaranteed not to change price over the
| |
| | it.John Smith writes articles for
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| term with no inflationary creep? What if
| |
| | blackandwhite.co.uk loans and mortgages,
|
| you got a further discount for paying
| |
| | offering Bad Credit Loans.
|
