Speculation that people working in certain sectors will be unable to buy Payment Protection Insurance to meet their financial commitments should redundancy occur is nothing but scaremongering, suggests PPI lobbyist Sara-Ann Burgess from Burgesses.

“A lot of insurers and media commentators are advising that potential purchasers of PPI will be turned down for cover if they’re in a sector that’s experiencing job losses, “ Sara-Ann explains, “but this is rubbish – only those who have been personally informed they are to lose their job will be excluded from cover.

“This rumour can be traced back to the nervous PPI providers who don’t want to be saddled with high volumes of claims – they’re keen to warn off consumers because they don’t want to have to make significant numbers of payouts and so dent their profits.”

As well as implying that certain sectors are excluded from cover, a number of providers are withdrawing their unemployment-only products. Financial aggregator website moneysupermarket reports that the PPI providers it deals with recently withdrew their unemployment only policies, confirming Burgesses suspicion that they do not want high sales volumes for this type of cover.

The aggregator advises that only one independent provider, British Insurance, continues to offer unemployment-only options for PPI.

Sara-Ann continues; “It’s criminal – providers are turning their backs on consumers when they need them most. If you exclude people from ‘at risk’ sectors, you’re rejecting the whole of the UK. You only have to look at the job loss announcements within the last week to realise that every sector is ‘at risk’.”

In financial services, Citigroup announced the cutting of 52,000 posts worldwide with heavy losses in London and New York whilst Friends Provident confirmed 280 posts would go. The communications sector suffered 10,000 job cuts - BT had already announced 4,000 redundancies and now predicts a further 6,000 jobs will go by March.

Manufacturing and construction weren’t immune either; truck maker Leyland announced 280 job losses following a decline in demand, construction equipment maker JCB added a further 398 redundancies to the 178 job cuts it revealed last month and plumbing and materials firm Wolsey announced the closure of 200 branches with 2,300 job losses.

Sara-Ann concluded:”This illustrates just how far reaching the recession is – no matter what sector you’re in, there will be casualties. It’s wrong to warn off consumers and withdraw cover just because you don’t want to pay out. The more honourable providers will offer that financial safety net to purchasers in every sector, so consumers mustn’t be fooled into thinking PPI isn’t available – you just have to shop around.

“This is yet another example of unscrupulous providers moving the goalposts to suit themselves – they’re leaving consumers exposed to financial hardship when they should be protecting them.”

Recently released insolvency figures for the third quarter of 2008 make grizzly reading and have put a real emphasis on the need for well designed, good value and independently advised payment protection insurance (PPI).

Sara-Ann Burgess, a longstanding activist for improvements in the market, says now is the time for independent intermediaries in this sector, like British Insurance, to come to the fore and guide their clients towards the policies that will protect them and their families in the coming months.

Burgess said the rise in individual insolvencies across the UK was a macabre indication of how the financial storm in the world of high finance was now dropping to street level and affecting an average 2.4 families throughout the country.

“In England and Wales there were over 27,000 individual insolvencies in the third quarter of this year. That was up by 8.8% on the previous quarter and almost 5% on the same period last year,” said Burgess.

In Scotland, the picture was a lot worse and individual insolvencies in Q3 totalled 5998. This was up by over 25% of the preceding quarter and by a frightening 70% on the same period a year ago.

“With employers like Royal Bank of Scotland and BT starting to make thousands of people redundant these figures are going to get worse before they get better. Unfortunately there are a lot more people who will find their job coming under threat over the next two or three quarters and in turn they will struggle to remain financially afloat.”

In these tattered financial times, Burgess pleaded with consumers to take a moment to see how they would cope if they were unable to work through accident, sickness or unemployment.

She said: “If there is a little nest egg tucked away for a rainy day or employers offer good redundancy and sick pay packages, then PPI may not be needed. But if there is nothing to break the fall then many people are unfortunately going to be in for a hard landing. We want to try and avoid this at all costs.”

Insurers must not follow lenders by penalising customers when hard times hit, says independent protection specialist Burgesses.

The warning comes on the back of new government figures published last week that records unemployment surging to an 11-year high with the number of people out of work growing by 140,000 to 1.82 million.

The three months to September saw unemployment rise to the highest levels since the end of 1997. But the figures do not include recent widespread redundancies across the construction and financial sectors, let alone the near five thousand job losses announced in one day.

Burgesses fears that the rapid rise in the numbers of people losing their jobs will prompt insurers to withdraw some forms of specialist cover in an attempt to mitigate against an expected rise in claims.

Lenders have already attracted heavy criticism for hiking up rates on some mortgage products and credit cards at a time when the bank base rate is in sharp decline.

Sara-Ann Burgess, the managing director of Burgesses, said: “There is now a real concern that insurers will also look to put the boot into customers by seeking to withdraw valuable insurances like unemployment-only cover from the marketplace.

“Many major insurers have already gone down this route and my concern is that others will follow. That would be disastrous for the many thousands of people that will be considering buying peace of mind as we move into a period of economic meltdown.

“Insurers must resist the temptation to ape lenders by hiking rates or withdrawing this crucial insurance altogether. After all, these firms exist to offer policyholders protection in difficult times – not when everything in the garden is rosy.”

Employment prospects are increasingly gloomy with Capital Economics, the economic consultancy, expecting unemployment to peak in 2010 at around 3.3 million. The Government’s Small Business Forum yesterday warned of the prospect of many businesses going bust by Christmas.

But it is in car manufacturing that there is a real danger of the wheels coming off and putting many thousands of workers on the dole. New car sales in Britain have fallen for six months in a row and overseas orders have almost dried up.

Already most UK motor manufacturer has moved to short-time working and cut production levels and widespread redundancies are just around the corner. US giant General Motors is on the brink of going bust and it employs nearly 5000 people in this country.

“It is at times like these that people will look to the creditor market to provide peace of mind by offering relevant and affordable insurance solutions,” remarks Burgess.

“If it was to snub consumers by hiking prices or withdrawing cover it would dwarf the Millennium Dome

Despite Conservative Leader David Cameron’s confirmation that unemployment is rising at its fastest rate for 17 years, consumers are still ignoring products that will meet their financial commitments should redundancy occur warns Payment Protection Insurance lobbyist Sara-Ann Burgess from Burgesses.

Official unemployment figures due out this week are expected to top 1.8m, the highest since 1998, and analysts are predicting this will increase to 2.7m by Q1 2010 – representing a jobless rate of 8%.
Sales of Mortgage Payment Protection Insurance, a policy that pays claimants’ mortgages in the event of accident, sickness or unemployment, are at an all time low – according to statistics from the Council of Mortgage Lenders and Association of British Insurers only 17% of people with mortgages have this cover.

Around 22% of homeowners taking out new mortgages in the first half of this year opted for MPPI, but this figure drops once the loan is in force. The current figure of 17% leaves 83% potentially exposed to financial hardship should redundancy occur which could result in repossession.

Sara-Ann comments: “Given the CML predicts home repossessions to soar to 45,000 by the end of the year and the FSA says 312,000 homeowners were in arrears by the end of June, you would think consumers would explore all options that provide some financial breathing space should their income be interrupted.

“Shelter has seen a 167% rise in calls to its helpline over the past six months – mainly from families seeking advice about repossession. Those with MPPI should be able to stave off this last resort - statistics show that over 88% of MPPI claims are accepted and the average length of a claim payment is around 170 days –so mortgages are being paid for nearly six months.”

Lack of consumer take up can be attributed to the poor reputation of the PPI sector – it has suffered numerous mis-selling scandals and lenders have become well-known for over-inflating premiums and saddling people with policies which cannot be claimed on. As a result, the consensus appears to be ‘have no cover and avoid being ripped off’.

However, independent providers are fighting to restore the reputation of this beleaguered sector. Despite only having a 1% market share, independents are outshining the larger players when it comes to their breadth of products, competitiveness and customer service.

In the last two weeks alone, independent provider, British Insurer has won six awards for its payment protection portfolio, scooping Best Overall Insurance Provider, Excellence in Treating Customers Fairly, Best Mortgage Payment Protection Insurance Provider and Outstanding Consumer Champion accolades from magazines and websites.

Sara-Ann concludes: “These firms are trying to salvage the reputation of this beleaguered sector and in doing so, helping to protect the financial well-being of thousands of people. Consumers do not have to pay over the odds for cover, British Insurance premiums are £3.90 per £100 of benefit for accident, sickness and unemployment cover and £3.40 per £100 for unemployment only.

“You would have thought that the number of MPPI policies in force would increase year upon year, but they’re not. Every week we’re given dire predictions of further job losses, stagnant wages and more forced house sales and it pains me to think that the repossession statistics could be reduced if more people considered MPPI amongst their options.”

The whining from financial services bodies in response to the Competition Commission’s recommendations to tackle Payment Protection Insurance mis-selling reminds me of spoilt children who cannot get their own way, says PPI lobbyist Sara-Ann Burgess from Burgesses.

Remedial measures have today been proposed by the Commission in a bid to increase competition within the PPI sector and so benefit consumers. Those working in the interests of consumers have welcomed these proposals, however protestations have been lodged by the Association of British Insurers, Finance and Leasing Association and British Bankers Association.

Sara-Ann comments: “This clearly smacks of ‘sour grapes’ because their members will be unable to continue profiteering at the expense of consumers.”

The ABI says the decision to ban the sale of PPI when taking out a loan will leave millions of consumers unprotected, increase their financial hardship and leave them unable to take out protection in a straightforward manner.

Sara-Ann counters: “What rubbish! The ABI clearly underestimates the intelligence of consumers – the Commission’s 14 day ban on lenders peddling their own PPI empowers consumers, giving them time to shop around for a better deal. Consumers are hardly going to take out a loan and within 14 days say they are unable to make the first loan repayment, so this ban will not result in any hardship. It’s more likely to increase the hardship for the lender whose profit margin will decrease.

“And is the ABI ignorant to the existence of the internet when it comes to purchasing straightforward cover? Put payment protection insurance into a search engine and numerous companies will come up. Many of them, such as British Insurance, are recognised as industry-leaders with award-winning products and services. Consumers are quite capable of deciding when and how they want to purchase cover and should not have it forced upon them. It also suggested these measures will deny consumers PPI – a knee-jerk response from an organisation who knows the time of reckoning has come for its members.”

Similar sentiments were heard from the FLA who not only feared vulnerable consumers will go unprotected, but that the loss of single premium policies will result in worse terms.

“This response beggars belief,” says Sara-Ann. “Over the years, its members have preyed upon the vulnerability of consumers and extracted excessive premiums from them. I fail to see how anyone can justify single premium policies – they result in consumers paying interest on the loan and the premium - it’s a like a double whammy that lasts for years.

“The FLA’s comment over single premium policies is a clear indicator of the dent the abolition of these policies will have on members’ profit margins. No longer will they be able to use the profits from single premium PPI to prop up loan losses – a tactic that’s been suggested by those scrutinising this sector.”
‘Without conscience’ is how the BBA views the Commission. It opines the proposals will encourage people to borrow without back-up and criticises the Commission for going well beyond its remit. Sara-Ann replies: “It’s a bit rich to be talking about conscience when BBA members clearly don’t have one. Out of the £3.5bn worth of PPI sold by the 12 largest sellers in 2006, £1.4bn was excess profit. And let’s not forget the Financial Services Authority recently fined Alliance & Leicester £7m after finding staff pressurised customers into buying policies they either didn’t want or need.

“I suggest the only people who have gone well beyond their remit are those with a monopoly who have used their sales advantage to the detriment of consumers.”

A view shared by consumer watchdog Which? who believes two million people purchased PPI only to find they cannot claim owing to the small print exclusions. The Financial Ombudsman is currently getting 100 complaints a day – the biggest source of grievances – and has called upon the FSA to take action to stop banks fobbing off customers who complain about PPI mis-selling.

Sara-Ann concludes: “Lenders suggest the Commission is reckless in pushing through its proposals, but I believe it’s the lenders who are irresponsible – their actions have tarnished the reputation of more honourable PPI providers and only served to push consumers further away from this product.

“These bodies are clearly acting in their own self-interest, they profess to be concerned about consumers, but their actions over the years are contrary to this. They deserve to have PPI taken away from them, as the saying goes ‘the punishment fits the crime’.”

The reign of ‘fat cat’ Payment Protection Insurance providers ripping off consumers with mis-sold and over-priced products is to end following intervention by the Competition Commission – and it can’t come soon enough – suggests PPI lobbyist Sara-Ann Burgess from Burgesses.

She explains: “For years consumers have fallen victim to pressurised selling tactics from High Street lenders who have a clear point of sale advantage over other PPI distributors. They account for over 70% of policy sales – a market share stronghold that has allowed them to mis-sell to and over-charge customers, in a bid to boost their flagging profits.”

However this is to change, following the Competition Commission’s announcement today, of its proposed remedies designed to increase competition in the PPI sector. They include;

Prohibiting the sale of PPI by a distributor to a customer within 14 days of the lender selling credit. This addresses the point of sale advantage and gives customers opportunities to compare products and providers.

Separating the PPI quote from the loan offer. Customers are to receive a personal PPI quote which outlines the price of the product individually and its cost when added to the credit product. If not given at point of sale, the credit provider must do so when contacting the customer to offer PPI.

Banning the sale of single premium policies - this acts as a barrier to customers switching and its costs are difficult to compare with other PPI policies.

Including certain information in PPI advertisements - such as the price of PPI, expressed in a common format of monthly cost per £100 of benefit, plus reference to the purchase being optional and products available from other providers.

Advertising personal loan and second charge mortgage PPI alongside any respective credit ads.

Providing the Financial Services Authority with information for use in PPI comparison tables.

Producing annual PPI statements, similar to the personal quote, encouraging customers to review their annual policies. This will make it easier when deciding whether to switch providers.

Sara-Ann comments: “The PPI sector has been under investigation since September 05, ever since it was referred to the Commission by the Office of Fair Trading. Since then a number of independent providers have lobbied for change, aware of the scale of the mis-selling practices and frustrated at the lack of regulation to rein the perpetrators in. I’m delighted that common sense and fairness has prevailed and measures will at last be put in place to protect consumers.

“What’s interesting is that the recommendations echo everything independent provider British Insurance has advocated for years; take away the lenders’ point of sale advantage, separate out the PPI quote and provide more information, ban single premiums – where a customer pays upfront for the cover and ends of paying interest on the cost of the loan and the accompanying PPI policy, clearly illustrate the costs so they can be compared to other providers and provide mechanisms for consumers to shop around.”

Sara-Ann concludes: “Customers have been severely disadvantaged by lenders’ anti-competitive practices and the Commission’s proposed remedial measures reflect the severity of the problem. It’s driven a cart and horses through everything credit providers do and is a welcome shake-up.”

Interested parties have until 4 December to comment on the Commission’s recommendations and its final report will be published mid January 2009.

The government must outlaw the increasing use of charging orders by high street financial institutions to recover outstanding debt.

That’s the belief of Sara-Ann Burgess, managing director of independent protection insurance specialist Burgesses.

She was reacting to the Monday evening screening of the BBC flagship Panorama programme. It exposed the lengths to which some lenders will go to in order to recover relatively insignificant outstanding loans.

It revealed that in the most extreme cases lenders are using charging orders as the first stage of a process that ends with the debtor being ordered to sell their home in order to repay the debt.

“Making borrowers homeless is at the very least bad business practice and at worst a moral crime,” said Burgess.

“Those that are struggling to repay a debt are rarely aware when they receive a charging order that these can be attached to their home and they risk losing the roof over their heads.

“It means that lenders seeking to recover even small unsecured loans could force the sale of the debtor’s home rendering families homeless. It’s outrageous but it is happening up and down the country.”

She is calling for the government to urgently outlaw the practice before many more families are forced onto the streets.

She added: “Lenders are looking to protect their own positions in an increasingly difficult economic climate. To that end they are quicker to take more drastic steps to get their money back.

“Charging orders operate on a first come, first served basis, meaning the lender that moves most quickly to recover an outstanding debt gets first call on the cash. Most people struggling with debt owe a variety of lenders money, that’s why we are seeing them move much more quickly down the charging order road.”

The numbers of charging orders obtained at the courts have rocketed from 9,500 in the year 2000 to a staggering 97,000 last year.

That figure can only balloon as the economy asset bubble continues to deflate and jobs are lost.

Burgess adds: “Those that bought property at the market peak are most at risk as negative equity returns to blight the economy. Should one partner lose their job making mortgage repayments impossible to meet then it is obvious they can expect no help from banks or other finance houses.

“That’s why it is crucial that borrowers seek to protect themselves, should the worst happen, by buying insurance.

“Payment protection insurance to cover a loan or mortgage is a must-have in today’s market and very competitive rates are available from independent provides such as Burgesses or British Insurance. Never buy cover from a lender.

“As long as lenders are looking to take your home to recover the price of a new suite or bathroom it is imperative the borrower ensures he or she always buys relevant protection cover at the right price.”

Borrowers on tracker deals will be able to make huge savings on their mortgage payment protection insurance (MPPI) because of changes in the Bank of England Base Rate.

Sara-Ann Burgess, a director at payment protection insurance (PPI) specialist Burgesses, said borrowers with MPPI should check the level of cover they have in place regularly to make sure it matches their monthly payment.

She explained: “Many borrowers take out MPPI at the same time as they arrange their mortgage. They then don’t look at it again until they need to make a claim. However because interest rates are continually moving it is very easy for borrowers to find their initial MPPI cover is not aligned to what they are actually paying each month for their mortgage.”

According to Burgess, this means a lot of borrowers are either buying too much cover or not enough to meet their monthly payments.

In February 2000 the Bank of England Base Rate stood at 6%. By July 2003 that had fallen to 3.5%. It then climbed steadily before hitting 5.75% in July 2007 and has since plummeted back to the 3% in stands at today.

At a rate of 6%, a 25 year mortgage of £150 000 will cost £966.45 a month on a repayment basis. At 3% the same mortgage will only cost £711.32. Borrowers on tracker deals who have not reviewed their MPPI could therefore be paying for hundreds of pounds of protection they do not need.

“If borrowers have taken out their MPPI when rates were high, they will now be paying for more than they need,” said Burgess. “This is a perfect opportunity for them to review what they have in place and make sure it is suitable.”

Burgess said many borrowers would also have bought their MPPI policies from high street providers who were generally more expensive than some of the specialist and independent intermediaries in the market.

She commented: “Independent and ethical brokers like British Insurance will help borrowers get MPPI that is excellent value. At a time when money is tight, many borrowers will find they can keep their MPPI in place, but make significant savings by switching provider and adjusting the amount of cover they are buying.”

Keeping on top of financial matters is never easy, but for those looking to save money and keep themselves protected, Burgess said the effort would be well worth it.

Insolvency numbers are on the march and without payment protection insurance (PPI) consumers risk falling into the same financial hole as 27,087 of their peers did in the third quarter of this year.

Compiled by The Insolvency Service, the figures just released for England and Wales are up by 4.6% over the year and 8.8% on the previous quarter. The unfortunate truth, according to Sara-Ann Burgess, a longstanding campaigner in the PPI market, is that there is worse to come.

“Insolvency does not happen overnight and despite the recent cuts in the Bank of England Base Rate, there are a lot of people in serious financial straights because of the deteriorating labour market and the ongoing problems with securing credit.”

Although it was easy credit that created many of the insolvency problems we are facing, Burgess said the period of readjustment was very difficult when access to finance dried up.

She urged consumers to take time to assess their financial position and to draw up a budget for the weeks and months ahead. While cutting down on expenditure was going to be necessary for many, she said it was very important to make sure existing financial commitments could be met in the event of accident, sickness or unemployment.

“Life rarely goes according to plan and when we are blown off course by accident, sickness or unemployment, it often makes paying the bills impossible. PPI stops people getting knocked off their feet and gives them some breathing space. Without it, avoiding insolvency will be impossible for a growing number of people.”

According to Burgess, consumers should examine the financial safety nets below them. What is their redundancy package at work like? Would they be eligible for state benefits? Could they last until they kicked in? Are there savings to tide them over?

“People need to have a plan in place to protect themselves. If they couldn’t survive a change in their circumstances they should look at PPI. Ethical, low cost intermediaries like British Insurance will help consumers get policies that are suitable for their needs at a fraction of the cost charged by high street providers,” said Burgess.

With significantly over 100,000 people below set to become insolvent in the coming 12 months and thousands more to be hamstrung by financial problems, Burgess hoped more consumers would see good value PPI as a priority.

The UK economy is burling its way towards a deep and dark recession and this week’s hatchet job on interest rates by the Bank of England is its first public declaration of the scale of the problem.

Sara-Ann Burgess, a voice for change in the payment protection insurance (PPI) market and a director at specialist firm Burgesses says that slashing the Base Rate to 3% should set alarm bells ringing for consumers.

“Not only is it highly unusual for the Bank of England to cut its Base Rate by 1.5% in a single stroke, but the current rate of 3% is the lowest we have seen since 1954. Before taking this step, the members of the MPC will have read the Bank’s Inflation Report due out next week and it seems certain it will make for very unpleasant reading.”

While Burgess said the move would bring some breathing space for those on tracker and variable rate mortgages, she said any celebrations were likely to be short lived.

“Unfortunately the Bank of England would not take this type of drastic action if we were not iceberg bound. People should see this as a warning shot of a bleak commercial outlook in 2009 and take steps to protect themselves accordingly.”

Burgess urged consumers to assess their financial situation and work out how they would cope in the event of losing their job. For those that would struggle if made redundant, she said getting financial protection in place had to be a priority.

“There is no doubt that things in the labour market are going to get worse. State help is extremely limited and redundancy payments will not last long in most cases,” claimed Burgess.

She added: “Seeking out an ethical provider of PPI like British Insurance, will help consumers get the cover they need at a fraction of the price that is charged by the major high street banks and building societies. Some consumers may think the cut in Base Rates is a sign that they can relax. The truth is that it is likely to herald much worse times ahead.”