MPPI on FSA’s radar

Lord Adair Turner, chairman of the FSA, has indicated that Mortgage Payment Protection insurance could become a major focus for the regulator.

Speaking yesterday at the Association of British Insurers’ conference, Lord Turner said: “As the likelihood of unemployment-related claims increases, some insurers are responding by increasing premiums or reducing cover for existing policyholders. Whilst it is natural for the industry to respond to changes in risk, this raises issues with unfair contract terms, disclosure and our TCF Principles.

“How many consumers would have taken up this cover if they had known that at the very time they needed the protection the most, the price of it could significantly increase or the amount of cover decrease?”

Lord Turner warned that the insurance industry must expect the FSA to intervene to address poor consumer outcomes. He added: “And more than that they must think strategically about the impact of their actions on the sector’s reputation.”