News that nearly 700,000 people are on waiting lists for affordable housing in rural England underlines the importance of not only building and making available more homes for an increasing number unable to get on the property ladder, but serves as a reminder to insurers that they must offer products to help those in shared ownership schemes keep their long-awaited homes, says PPI lobbyist Sara-Ann Burgess from Burgesses.

She comments: “We’ve heard this week that over the last five years, the number of people waiting for an affordable home in country areas has risen by 37% - up from 507,757 in 2003 to 695,735 last year. In certain areas, around 11% of the local population are on a waiting list for affordable homes and it’s reported that some people would have to borrow up to 24 times their annual income to get a mortgage.

“It’s no surprise to find demand for part-buy and part-rent schemes spiralling out of control and the Government must move quickly to address this. However, what worries me is that when more properties are available and people move into their homes, they have very little in the way of Payment Protection Insurance to protect their financial commitments and payout should accident, sickness or unemployment occur.”

Only one independent provider, British Insurance, offers Mortgage Payment Protection Insurance for households involved in shared ownership schemes and with the dynamics of the home ownership market dramatically changing, there are calls for other insurers to follow suit and become more socially responsible.

Sara-Ann continues: “We know more people are opting for and waiting for the opportunity to take part in shared ownership schemes, so insurers must recognise this and introduce products that meet their needs. Those with fewer savings, who are often more financially vulnerable, should have access to products that will help them keep their homes should they lose their jobs.”

According to the National Housing Federation, 70,000 new affordable homes are needed in England each year to meet existing and future requirements. The NHF, in conjunction with the Campaign to Protect Rural England, recently launched a Charter – Save Rural England, Build Affordable Houses - to kick-start the Government into more proactively addressing the needs of those on lower incomes in rural areas who will never be able to meet the lending criteria for mortgages.

Sara-Ann concludes: “As well as a Charter to ensure all areas of the UK have access to more affordable housing, I’d like to see a Charter that ensures all householders across the UK have access to a wider range of Payment Protection Insurance products. In the same way, those in rural areas are being denied access to affordable homes; those in shared ownership schemes are being denied access to a financial safety net.”

Consumers should look to save money on their insurance cover in the same way as they are revising their high street spending, insists one major online protection insurance specialist.

Increasingly consumers have been seeking to save cash by switching their utilities provider or by reining back on spending on items such as new household appliances as the worldwide credit crunch filters through into Britain’s real economy.

But few people have taken the step of examining their outlay on insurance premiums as a way of making real savings.

Sara-Ann Burgess is managing director of Burgesses.com. She said: “If people would only take the trouble to dig out their insurance policies and discover how much they are paying and then research what alternative products and providers can offer, then I am sure they can make savings of hundreds of pounds.

“That is because very often the most popular insurances have been sold at the time of major purchases – when taking out a loan or mortgage for a house, for example. Expensive Payment Protection Insurance (PPI) was then pushed to unsuspecting borrowers as a means of boosting the bottom line of major financial corporations.

“In the old ‘buy now pay later’ age, single premium PPI, as sold by lenders, was simply another commodity bought and paid for over a fixed period of time. It was, and is, far too easy to conceal the true cost of the policy within the overall loan or mortgage. Today consumers cannot afford to be so complacent and should look to cancel this type of insurance and replace it with a much cheaper regular monthly premium policy.”

It is not uncommon for mortgage lenders to take in excess of 80% of a client’s premium in commission and over-rider payments, meaning that their cut commonly runs into hundreds, if not thousands, of pounds and contributes massively to shareholder profits. When added together it equates to over £5 billion per annum.

“People need to understand that they don’t have to buy PPI tied to their product and that they could find it cheaper by shopping around. They would then better understand the range of protection options available; helping them make a more considered and informed buying decision,” Burgess added.

“Products have also become much more sophisticated, as well as offering better value for money. For example, the introduction of age-banded MPPI policies can benefit younger borrowers especially to the tune of hundreds, if not thousands of pounds over the lifetime of the policy.

“And anyone that does not currently have this kind of insurance should think about taking it out very quickly. There are already more people out of work now than at any time in the last decade, according to the latest Labour Force Survey. This picture is not going to change any time soon and people should act now to guard against the scourge of unemployment and the ghastly prospect of possibly losing their home.”

Payment Protection insurers must offer policies that provide a financial safety net and meet the monthly commitments of all householders, whether they’re renting, in shared ownership schemes or have mortgages, says PPI lobbyist Sara-Ann Burgess from Burgesses.

Traditionally, only those with mortgages have been able to protect their monthly repayments should accident, sickness or unemployment occur, but with increasing numbers of people renting or opting to take advantage of shared ownership schemes, Sara-Ann believes insurers must be more socially responsible and offer a wider portfolio of products.

She comments: “We know there’s a rental boom and demand for Housing Association schemes is high, yet there’s little out there to protect householders’ monthly payments should something happen to stop them meeting their financial commitments. Why are insurers ignoring a whole sector of society, who for one reason or another do not have a full mortgage, but are just as much at risk of losing their family home as everyone else?”

Independent PPI provider British Insurance was the first to recently launch policies for people in shared ownership schemes and those who rent. The policies offer back to day one payouts, a choice of cover options and cater for people who voluntarily leave work to become carers for up to one year.
Sara-Ann continues: “I applaud any provider who recognises the dynamics of home ownership are changing and introduces products that meet the needs of more consumers. In this current climate, everyone is at risk of losing their job, so the more householders who can protect their monthly commitments, the better.”

British Insurance’s policies also provide free Health, Employment and Legal Protector cover, 24/7 health and legal helpline services, plus Legal Expenses in relation to employment and bodily injury disputes.

Customers can get information on general health and non-diagnostic matters such as allergies, side effects of drugs and Health Service waiting lists and there’s a free back to work service with self help guides, access to a specialist website, job vacancy database and telephone advice via employment counsellors.

The shared-ownership policy has been given a five star rating from research specialist Defaqto, who after scrutinising 103 MPPI policies, placed it ‘at the very top of the market’ for its wide-ranging cover and support services.

Sara-Ann concludes: “Whilst not all those renting or in shared ownership schemes are financially vulnerable, many will be on lower incomes than those with mortgages so are in greater need for low-cost PPI. I’m delighted more is being done in this area and the support services will be a great help to those trying to find a new job. I hope other PPI providers will follow the lead of British Insurance.”

Insurers have turned the tables on vulnerable customers and are now refusing to offer payment protection insurance (PPI) to those who they feel might be at risk of losing their job in the coming months.

For many HBOS staff finding PPI cover is proving exceptionally difficult and leading insurers, including are refusing to offer policies to these individuals.

Following the announced merger of Lloyds TSB and HBOS, tens of thousands of staff are likely to be made redundant as the two operations rationalise their branch network and administration activities. However for staff worried about protecting their financial security, finding PPI insurance is becoming a real problem.

Sara-Ann Burgess, managing director at PPI specialist Burgesses, says it is a disgrace that insurers are refusing to cover those who need their help most. “This approach is typical of how the big banks and insurers have behaved in the PPI market for years. They have been quick to profit by selling over priced policies to customers who in many cases were not even been eligible to claim on the insurance. Now when genuine people, with genuine fears come to take out cover they are refused.”

Burgess said that the looming job cuts at HBOS were no reason for the staff to be blackballed by insurers. At the moment there has been no announcement on how many jobs will be lost, or where they will be lost. As such writing off applications for cover from all HBOS staff was unacceptable.

“Fortunately this profit hungry approach is not taken by everyone in the PPI market and there are still providers out there genuinely committed to helping customers. Independent intermediaries like British Insurance are able to source policies from across the market and will be able to help those who are being turned away by other providers,” said Burgess.

In fact, given that the major financial institutions were the worst offenders when it came to over pricing their policies, Burgess said it was likely even the most vulnerable customers would be able to not only find cover, but also save money by working with a firm such as British Insurance.

“After years of profiteering, the biggest players are starting to pull up the ladder and leave customers who need their help behind. PPI is there to protect people in the face of redundancy and it strikes me as sharp practice to be refusing applications from staff at companies going through turbulent times.”

She added: “Are we going to get to a situation where the big providers will simply not cover staff working at estate agents, property developers or construction firms because they are going through a difficult period?”

“’When sorrows come they come not single spies but in battalions’. These words of Winston Churchill have never been more apt than when applied to the financial crisis that is currently engulfing the globe,” notes Burgesses Managing Director Sara-Ann Burgess.

“The problem is we don’t have a charismatic leader like Churchill to steer us into calmer waters and many people are in danger of going under.

“Examine the facts. The 158-year-old investment bank Lehman’s has gone under with the knock on effect of 5,000 workers in this country are now looking for another job. The behemoth that is American International Group (AIG) with a worldwide workforce of 116,000, and more than 2,000 of those in this country, has gone cap in hand to beg for a multi-billion dollar lifeline from the US central bank. HBOS – the biggest mortgage lender in the country - is forced into the arms of Lloyds TSB with job ‘rationalisation’ inevitable.

“At the same time confidence among British businesses is languishing near a record low as consumers retreat in the wake of slumping house prices, currently falling around 2 per cent a month.”

This sharp downturn is adversely affecting the jobs market. Last month saw the biggest monthly increase in the unemployed (81,000) since Dec 92 - the seventh successive monthly rise, while the number of job vacancies has shrunk.

But there is even worse to come. Experts predict that up to half a million workers will lose their jobs over the next two years when the contagion spreads beyond the City of London and into the wider economy. Most at risk are the seven million employed in the vulnerable retail and leisure industries.

Thousands have already lost their jobs this year and car manufacturers are also scaling back production as demand for new motors falls off the scale. The construction industry faces destruction with to 50,000 workers in this sector having already lost their jobs.

Burgess added: “There can be no doubt that we are in the middle of economic recession and it is unlikely that the economy will turnaround anytime soon.

“The latest seismic shocks to the world’s financial system has meant that the rate at which banks lend to each other has jumped again – which will make mortgages more expensive at a time of rocketing inflation.

“At the same time people are much less secure in their jobs. What people crave in such an environment is peace of mind. They want to know that should the worst happen they will always have a roof over their heads.

“It’s comforting to know that it is possible to buy peace of mind and it doesn’t cost the earth. Insuring against being unable to pay your mortgage because of accident sickness or unemployment is available for as little as £1.60 per £100 per month from independent insurance providers such as British Insurance.”

For most people, their mortgage is the most important financial obligation because their homes are secured by it. Failure to meet mortgage repayment guidelines can result in repossession and with banks currently very short of capital they are more likely to move to take charge of your house.

News of Lloyds TSB’s takeover of HBOS will do little to help the thousands of people falling into mortgage arrears says Payment Protection Insurance lobbyist Sara-Ann Burgess from Burgesses.

She comments: “Whilst this £12.2bn takeover might relieve the pressure on HBOS, it will not ease the financial burden felt by hundreds of thousands of people faced with crippling debts and little support from their lender. More and more people are losing their jobs and struggling to make ends meet, but this is of little concern to these two organisations that collectively will become a ‘super bank’.”

According to the Council of Mortgage Lenders, at the end of the first half of this year, 155,600 households had arrears of three months or more. Many have contacted the National Debtline - the debt advice charity reports that 4,154 calls, in connection with first and second charge mortgages, were made during June, July and August this year, up from 2865 the previous year.

Sara-Ann asks: “Where are the lenders when their customers need them most? If they’re calling Debtline it must be because they’re getting little support from their mortgage company. The Charity has been recruiting to try and keep pace with the demand for its services – there are now 100 staff on hand to give advice, but I suspect this is the tip of the iceberg. The numbers of callers would double again if the capacity to help them increased.”

There are also worries that LTSB and HBOS will hold a collective customer base of nearly one third of the UK’s savings and mortgage market, creating a larger captive audience, for the marketing of its own-brand PPI.

Sara-Ann continues: “There’s a general nervousness about the stability of jobs which means more people may consider purchasing PPI as a financial safety net. This is great news, but consumers should not buy cover that’s offered by their lender – shop around, as much cheaper and more comprehensive policies can be sourced via independent providers.”

She concludes: “I hope more support will be given to those struggling to make their mortgage repayments and customers will not be taken advantage of. I also urge people to purchase PPI – it provides some financial breathing space for those made redundant – something I hope the 40,000 or so employees, plus staff working in businesses that support LTSB and HBOS will get.

Consumers must proactively seek to protect themselves in the face of a rising tide of unemployment and take responsibility for their own long-term financial health, says payment protection insurance specialist, Burgesses.

The Confederation of British Industry (CBI) has significantly revised its economic outlook and in its most recent forecast, released today (15.09.08), believes the UK is now entering a recession that will put hundreds of thousands of people out of work.

The CBI believes unemployment will rise over the course of the coming months, breaking the 2 million barrier in 2009. This is a very much bleaker outlook than the CBI gave earlier in the year when it said the UK would avoid recession and is a clear indication of just how bad things are likely to get.

Given the deteriorating economic situation, Sara-Ann Burgess, director at Burgesses, said it was up to each and every individual to take responsibility for their own financial situation and make sure it was sustainable in the changing environment.

While UK consumers have been quick to take on debt, not all had been so quick to make sure they could pay it back and in a faltering economy, such provisions will prove essential, according to Burgess.

She said: “Hundreds of thousands of people are going to lose their jobs over the coming months and this is going to make it very difficult for many of them to meet their financial commitments. Finding new jobs is not going to be as easy as it has been in recent years and for those that do not have savings to meet the mortgage or pay their monthly credit card bills, getting insurance in place now will help them avoid financial disaster if they are made redundant.”

Despite changes to the Income Support for Mortgage Interest benefit, which will come into force next year, the vast majority of consumers will receive no help with their mortgage should they be unable to pay due to redundancy.

Burgess said it was time for consumers to take responsibility for their own future financial health and urged them to see what the protection market had to offer.

“There is robust, low cost protection insurance available in the market despite some of the bad press the protection industry has received. Those who would be unable to pay their mortgage if they were made redundant should investigate their options. This economic storm is going to get worse before it gets better and consumers must protect themselves.”

As the economic downturn gains momentum and credit crunch casualties continue to increase, it’s more important than ever for consumers to take out some form of income protection, so they can pay their monthly bills should they lose their jobs, warns Payment Protection Insurance sector lobbyist Sara-Ann Burgess from Burgesses.

She comments: “Only this week we’ve seen the collapse of the fourth largest investment bank, Lehman Brothers and witnessed on the news, employees packing up their belongings in boxes, facing an uncertain future. XL Airways employees were equally devastated to find they were out of a job last week and there’s a general nervousness about the stability of HBOS.

“Now is not the time to turn your back on income protection, it’s vital that during these difficult times, everyone has a financial safety net to help meet monthly commitments should something happen. Even if you have savings to fall back on, how long will these last given the current food, fuel and utility prices? Income protection provides a monthly replacement income for up to a year, paying those all important bills and giving much-needed financial breathing space to those who either need to find a new job or recover from an accident or sickness.”

The reputation of the PPI sector has been tarnished over the years - it’s currently under close scrutiny from the Competition Commission, following allegations of mis-selling, high pressure sales tactics, over-priced products and vast numbers of claims rejections, due to policies being sold to the wrong people.

Consumers have subsequently turned their back on providers. This, suggests Sara-Ann, is leaving millions of people exposed to financial hardship should they be made redundant, have an accident or become sick.

She continues: “Over-priced PPI products have been marketed by High Street banks and building societies for years and people now take the view they would rather save their money and take a chance. In this current climate, it’s a very risky strategy and one I do not recommend.

“However, there are many more-ethical independent income protection providers who offer good value products that are very comprehensive in their cover and not over-priced. Prices start at £1.90 per £100 of monthly income.”

Sara-Ann concludes: “Over the last week we’ve seen people in despair, wondering how to pay their bills, feed their children and keep a roof over their head when there are no wages coming in. Whilst the redundancy could not have been avoided, the financial hardship that will inevitably follow can.”

Borrowers must not fall in to the trap of believing the recently announced changes to Income Support for Mortgage Interest (ISMI) payments mean they have nothing to worry about.

Last week Stephen Timms, minister for welfare reform, announced that ISMI benefit would, from next April, be available after 13 weeks and not 39 weeks as is currently the situation.

At the moment, the benefit is only paid on the interest on loans up to £100,000, thereafter no support is given. Timms also announced that this would change from next April and that the upper limit for the benefit would move to £175 000.

This is welcome news for a small number of borrowers, however it is important that people do not mistake the headlines and simply believe there is now a state-sponsored safety net in place for those who struggle with their mortgage because of accident, sickness or unemployment.

Sara-Ann Burgess, Managing Director at payment protection insurance specialist Burgesses, comments: “I am pleased to see the government make changes in this area, but as usual they do not go far enough and they will do little to help the vast majority of borrowers in the UK who fall into problems with their mortgage in the years ahead.”

In the first instance, Burgess said those eligible to claim would still have to pay their mortgage for the first 13 weeks, before they were able to claim any help. Three months is a long time and even if lenders were prepared to work with borrowers if they fall behind on their payments, avoiding the debt mounting to unserviceable levels would be very difficult indeed.

Burgess also said that there was only a very small percentage of people eligible for the ISMI benefit, which is only open to those on Income Support, Pension Credit and income-based Jobseeker’s Allowance.

Indeed she worried that many people seeing all of the headlines may fail to read further into the issue and simply assume that the government has taken steps to provide cover for them.

“If people really want to look out for both themselves and their families, then relying on the ISMI changes is a very dangerous approach indeed,” says Burgess. “Looking out for the flexible and good value policies now available in the market is the only way people can be sure they are covered from the first day they are unable to work and that they will have money to pay the bills.”

Intermediaries are being warned to check the domicile of their general insurance product providers, or risk being out of pocket. That’s because providers that are domiciled overseas are not subject to the demands of the Financial Ombudsman Service (FOS) and the Financial Services Compensation Schemes (FSCS), says Burgesses.com.

It cautions that when the mortgage and general insurance industries came under statutory regulation, they immediately signed up to meet industry standards of professionalism and competence – that included offering access to the FSCS. Crucially, the FSCS has the power to compensate consumers in the event of the failure of any firm that is authorised. That guarantee does not apply to customers of firms domiciled outside the UK. That can have real consequences for intermediaries selling or advising on products from overseas providers that have no obligation to the Financial Services Authority (FSA) or the FSCS.

Sara-Ann Burgess managing director of Burgesses.com explained:

“Intermediaries choosing to sue these firms are denying their clients access to the compensation through the FSCS should something go wrong and they could end up footing the bill.

“Those advising or selling products provided by insurance firms that fall outside of the regulatory regime, and therefore not using the key facts logo nor providing prescribed information, could also be deemed to fall foul of the FSA’s treating customers fairly guidelines.

“Intermediaries should do a little homework to make sure they don’t place themselves in a vulnerable position by using a non-UK regulated product provider.”