The financial services industry has reached this agreement with the FSA to reassure customers, minimise market confusion, maintain confidence in MPPI and ensure that people who have MPPI can maintain their cover, especially in these times of continuing economic uncertainty.
Under the agreed framework, mortgage lenders and insurers will work together to review the terms and conditions of all their MPPI policies and associated sales and marketing materials to ensure that any potential future changes will fall in line with the agreement. If any changes are needed to any policies, firms will contact customers individually to let them know what the changes are and how their policy will work in the future.
ABI Director General Stephen Haddrill said: "MPPI is an important product and is playing a key part in helping to keep people in their homes during the recession. It can offer a lifeline to people who may otherwise have faced losing their home. These policies provide extremely valuable cover for customers and this agreement is all about ensuring that they continue to do so.
"As with all insurance, premiums need to reflect the risk but any changes not only need to be fair which we believe they are, but also to be seen to be fair."
He added: "MPPI customers do not need to take any action, although it is important that they continue to pay their premiums to ensure that their cover continues. Their mortgage lender or insurer will contact them if their policy is affected in any way."
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