Unemployment Insurance Press

Payment Protection Insurance lobbyist Sara-Ann Burgess, Managing Director of specialist firm Burgesses, has won the Outstanding Personal Achievement accolade in this year’s Best Business Awards.

Sara-Ann received the Award in recognition of her involvement with another independent PPI firm, British Insurance, where she is General Manager.

Despite credit providers accounting for 90% of all PPI sales, British Insurance is widely recognised as ahead of the pack when it comes to internet-sourced cover. It has received more awards for its market-leading portfolio and outstanding customer service than any other PPI provider in the UK and as a result, the firm was asked to join Europe’s largest insurance intermediary – the Towergate Partnership – in 2008.

Sara-Ann is considered a leading authority on payment protection insurance and has for years fought to break the lenders’ monopoly in this sector, abolish anti-competitive practices, secure a better deal for consumers and make insurance easily accessible to all. This award is testament to her efforts.

The Best Business Awards are run by Awards Intelligence, an independent firm that recognises and rewards best practice across the public and private sector. Organisations can enter around 20 categories and their submissions are scrutinised by a judging panel drawn from business leaders and past award winners specialising in differing disciplines.

Around 150 entries are judged on a quarterly basis and to win the Outstanding Personal Achievement award, Sara-Ann had to demonstrate how she launched and built her business or led it to greatness. She was scored against specific criteria where particular emphasis was placed on success and innovation.

Awards Intelligence’s Mark Llewellyn-Slade gave feedback from the chairman of the judges. He said: “Sara-Ann played a key role in building British Insurance into a market leader in payment protection insurance. The judges were particularly impressed with the way the company has harnessed the power of online technology to deliver quality insurance at market leading prices. This, coupled with their no-nonsense approach to business and excellent customer service makes for a powerful proposition. Sara-Ann’s focus, drive and determination have been instrumental in British Insurance achieving success.”

Sara-Ann commented: “I’m delighted to have won this award - in a lender-dominated market, small players have a crucial role to play to ensure consumers have a choice of providers when it comes to PPI. Burgesses and British Insurance will continue to take on the larger players and endeavour to stop credit providers working to the detriment of consumers.”

Banks and building societies that continue to use devious tactics to take cash from customers must be boycotted says Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses.

Her call to action follows news that credit providers are charging customers as much for monthly-paid payment protection insurance as they did for now-outlawed single premium policies – when the cost was added onto the value of the loan and interest charged on both. Payment protection meets monthly financial commitments such as loans, mortgages and credit card bills if the policyholder’s income is interrupted due to redundancy, an accident or sickness.

Consumer association Which? recently published research revealing how a customer repaying a £5000 Alliance & Leicester loan with monthly PPI in June would shell out the same in interest payments and premiums as a loan with a single premium policy in November 08.

The Financial Services Authority called for members to stop selling single premium policies earlier this year – a move that was criticised by many credit providers who foresaw a dramatic dip in profits. Financial research firm Datamonitor estimated that in 2007, single premium products accounted for 68% of a £5.5bn + market dominated by lenders.

Sara-Ann comments: “Credit providers have made vast profits out of PPI over the years and they do not want this income stream to end. Rather than lose out, they’re pressurising customers into buying cover at extortionate premiums at the time their loan is agreed. And it isn’t just in the area of PPI where lenders are fleecing customers and showing their true colours – they’re hiking up loan rates, contrary to Bank of England reductions, and plundering customers’ everyday accounts by increasing overdraft costs.”

Financial comparison firms Moneyfacts, Moneyextra and Moneysupermarket confirm this. Moneyfacts recently issued reports detailing how lenders are ignoring base rates and making their own rate adjustments in a bid to seize more cash from customers. It revealed how the unsecured personal loan rate for a person borrowing £5000 has jumped 44% in two years. The average rate in May 07 was 8.6% and it is now 12.4%.

Moneyextra highlighted how lenders have set their Standard Variable Rate at an average of 4.19% above the base rate of 0.5% - in the case of Cheltenham & Gloucester and Lloyds it is up to 5.99%. This time last year the average rate was 1.9%. It reported a third of those surveyed were unaware the average SVR is 8 times higher than the base rate and voiced concerns at customers misguided sense of loyalty towards lenders in trusting them to adjust rates in line with base rate settings.

Moneysupermarket scrutinised overdraft interest rates and found that lenders have been quick to increase the financial pressure on customers already in the red. Nationwide has hiked its Flexi Account overdraft costs from 9.9% in February last year to 18.9% in June this year and Barclays account holders will pay 19.3% from 8 June, as opposed to 15.6% last year. Lloyds, HSBC and NatWest customers will pay between 18.9 and 19.24%.

Sara-Ann continues: “It’s costing more to borrow money, at a time when the Bank of England is stabilising rates. Lenders are making customers pay more when they act in a financially responsible way and take out PPI and punishing them if they go overdrawn. People need all the financial support they can get, but they are being bled dry by the very institutions that caused the economic downturn in the first place.”

She concludes: “I urge disgruntled customers to vote with their feet and where they can, move their accounts elsewhere and search for more competitive loans. In the case of PPI, source cover from independent providers – they offer far superior benefits and cover and the premiums are cheaper.”

Standalone firm British Insurance has won more awards for its PPI portfolio and customer service than any other UK firm. Premiums are £3.40 per £100 of benefit for unemployment cover.

People taking out loans or mortgages are at grave risk of being mis-sold Payment Protection Insurance by their credit provider warns PPI lobbyist Sara-Ann Burgess from specialist firm Burgesses.

She believes High Street lenders are continuing to pressurise customers into taking out their own PPI by making it a condition of the loan, or in the case of single premium PPI, automatically including cover and adding the cost, plus interest, onto the loan repayment amount, without borrowers’ realising.

Sara-Ann comments: “Lenders have for years been fleecing their customers, making huge profits out of PPI and damaging the reputation of all PPI providers. Now they’re keener than ever to push this product as it will make up for the profit shortfalls they’re experiencing following downturns in other areas.

“Where properly sold, PPI provides an invaluable financial safety net if an income is interrupted because of accident, sickness or unemployment. It allows people to continue with their loan or mortgage repayments, even if they haven’t got an income coming in, for up to a year and has a huge role in helping people through this recession.”

She continues: “But it is not appropriate for everyone and this is the problem – lenders don’t care whether it’s the right product or not, they just want to make a sale, so it’s imperative borrowers are aware of their rights. No one has to buy the policy their lender offers, it is not a condition of the loan and it is perfectly acceptable to say no, assess whether a policy is suitable and shop around for cover - as is the case with any other insurance.

“Rising unemployment is prompting more consumers to consider PPI and this is where lenders are cashing in – they know people want to have the peace of mind that PPI provides and either are playing on customers’ insecurities or sneaking the cover through with the loan application.”

Whilst these tactics have been condemned by the Financial Services Authority, the Competition Commission and the Financial Ombudsman Service, many lenders are still ignoring requests to change the way they sell PPI, keen to boost their coffers at their customers’ expense.

The Financial Ombudsman Service in its Annual Review recently reported the number of PPI complaints had tripled in a year. In the financial year up to 31 March 08 it received 10,652 complaints, 12 months later this had risen to 31,066 – ahead of its 30,000 prediction for that year. On average, the Ombudsman upholds 57% of all the cases it handles, with PPI this increases to 89%.

Complaints were primarily to do with PPI sales rather than the rejection of claims and the majority were associated with single premium policies – a product that was supposed to be banned at the end of last month before Barclays and Lloyds challenged the Commission’s decision.

Sara-Ann explains: “The FSA called upon firms to stop selling single premium cover in February and the Commission set a deadline of the end of May for an outright ban. Now the Commission’s rulings have been challenged, everything has been put on the back-burner, so credit providers can still sell single premium cover.

I suspect they will be happy to face the wrath of the FSA - even if they only sell this cover for a short time, huge profits will be generated. However, I fear increased urgency could result in increased pressure on borrowers.”

Confirming these fears, the Ombudsman reported the most common complaints were from borrowers pressurised into purchasing a policy and from those not realising they had agreed to purchase cover.

Consumers who ‘unwittingly’ purchased cover stated that if they’d understood the policy restrictions in the first place, they would never have bought the policy. The FOS also voiced concern about consumers not realising they had borrowed money up front, with the extra interest implications, to pay for a single premium policy.

To compound their errors, lenders were also lambasted for not treating customers fairly when it came to handling after-sale complaints. Half of all the Ombudsman’s disputes were from the six largest financial services groups and Chief Ombudsman Walter Merricks berated businesses handling PPI complaints stating they had treated customers ‘nothing short of dismal’ and suggested there was a widespread problem amongst the PPI sector.

A view confirmed by PPI complaints portal PortalClaims. It recently named and shamed the top 10 offenders for dragging their feet when it came to responding to customers’ complaints. Lloyds, Barclays, Welcome, Black Horse and MBNA topped the poll with less than 20% of complaints responded to. Out of 109 complaints submitted to Barclays, just one per cent received a compensation offer. The remaining five were; GE Money, HFC, RBS, NatWest and Yorkshire Bank.

Sara-Ann concludes: “Given 89% of the Ombudsman’s complaints were upheld last year – way above their average – it underlines just how happy lenders are to ‘fob off’ consumers. They’re arrogant, over-bearing and without morals and customers must not be drawn into purchasing cover that can be sourced elsewhere from firms not linked in with the credit provision. Independents offer more competitive premiums and superior cover and benefits.”

Friday 29 May should have been a day of celebration. It was the date the Competition Commission set for the abolition of single premium Payment Protection Insurance. But thanks to some skulduggery from Barclays and Lloyds, High Street lenders can still continue to make obscene profits from these policies, at their customers’ expense.

This is the view of PPI lobbyist Sara-Ann Burgess from specialist firm Burgesses who suggests banks and building societies will fight tooth and nail to keep hold of these profit-laden policies. Barclays and Lloyds lodged an appeal against the Competition Commission’s ruling banning the sale of single premium cover and as a result, the Commission’s remedial measures have yet to come into force.

She says: “Lenders know the writing’s on the wall for single premium products but they can’t bring themselves to ditch them. This is a £5billion plus sector and 90% of it is in the hands of High Street lenders. No wonder financial commentators are inferring that if providers lose the right to sell single premium cover, they will make up their lost profits elsewhere.”

Many lenders are already inflating their rates on other products in a bid to recoup the two or more billions of pounds profit they will lose. The recent personal loan rate rise is testament to this. The average rate for borrowers wanting £5000 or more is up from 8.6% two years ago, to 12.4% today.

Sara-Ann continues: “This means thousands of consumers are facing a double whammy; they’re boosting lenders’ coffers by paying higher than average interest rates on loans and then topping them up again by shelling out on single premium policies that are so over-inflated they fall off the scale.”

With single premium cover, the cost of the policy is added onto the loan amount and interest is charged on both, generating millions of pounds in profits for the provider and leaving the customer vastly out of pocket. Lloyds alone stated the switch from single premium to monthly policies would reduce its income by £300million over the next year.

The Financial Services Authority has said it will come down hard on lenders who continue to sell this type of cover, but Sara-Ann fears that as the Commission’s report is now subject to an appeal, the regulator may have lost its appetite to investigate providers who fail to treat customers fairly.

She comments: “Rising unemployment is making it easier for lenders to pressurise customers into buying their cover – they will fall victim to unscrupulous selling and scare tactics, especially as more people are considering PPI, keen to receive financial support should they lose their job. I hope the FSA is keeping a close eye on the activities of its lenders, as past experience shows they cannot be trusted.”

The Financial Ombudsman Service reports a high proportion of the 25,000 PPI complaints received last year were traced back to High Street lenders and the FSA has fined a number of banks, including Alliance and Leicester, Egg, LV Banking Services and HFC bank, for PPI mis-selling.

Sara-Ann counters: “PPI is invaluable in this current climate – it will repay mortgages, loans or any other type of financial commitment if a salary is interrupted because of redundancy, accident or sickness. However, people should not be paying up front for cover when a loan is taken out – they should demand their premiums are paid monthly and they must shop around for a good deal. Would-be borrowers do not have to purchase their credit provider’s cover – it is not a condition of the loan.”

Economist and retiring Monetary Policy Committee member David Blanchflower recently indicated that at least one million more people will lose their jobs before UK unemployment peaks. He predicts 100,000 will lose their job each month until the end of the year.

Sara-Ann concludes: “This is a frightening statistic. I sincerely hope lenders do not prey on the vulnerabilities of their customers and push single premium policies – they are widely acknowledged as not being fit for purpose. I advise consumers to steer clear of lenders when looking to purchase PPI – independent providers are far more competitive when it comes to premiums and offer superior benefits and support services.”

Homeowners without the financial safety net of Payment Protection Insurance to repay their mortgages should redundancy strike are being lulled into a false sense of security by Government schemes that are only applicable to a minority and in reality, will increase rather than reduce debts.

The warning comes from PPI lobbyist Sara-Ann Burgess who is concerned that homeowners are ignoring PPI - a product that ensures continuity of mortgage repayments if a salary goes – in favour of recently-introduced or amended schemes that have attracted much Government ‘hype’.

Income Support for Mortgage Interest (ISMI) has been running for around 20 years. Claims can be made 13 weeks after the job loss and if successful, up to 100% of the interest on mortgage repayments will be made for two years. Repayment costs are not included, mortgages are capped at £200,000 and payouts will only be made if there’s no salary coming into the household. To be eligible, claimants have to receive income support, jobseeker’s allowance, pension credits or other means-tested benefits.

The Department for Work & Pensions estimates 200,000 people will benefit over the next year, however Sara-Ann believes this is nothing when you consider the number of households with mortgages. She says: “200,000 as a percentage of the 11.1million mortgages in the UK equates to under 2% of households eligible to claim. This is not such a wide-ranging scheme when you put it into context, especially as it appears the majority of claimants are pensioners.”

A second scheme, billed as a Mortgage Rescue package, also appears to be benefitting very few. Homeowners struggling to make their repayments could either sell part or their entire home to a local Housing Authority and continue living there paying part rent and a lower mortgage, or subsidised rent. Figures released by the Department for Communities and Local Government show that of the 452 homeowners who applied for this scheme, only one was deemed eligible for support.

Sara-Ann continues: “A good idea in theory, but in practise, it’s a non-starter. Mortgage Rescue is only available to the elderly, disabled or those with young families and is dependent on local councils taking part. The figures speak for themselves.”

The Homeowner Mortgage Support Scheme allows cash-strapped borrowers to take a two year mortgage interest payment break. Available to those who don’t claim benefits, borrowers must pay 30% of their mortgage every month and the remaining amount owed will be added onto the overall cost of the loan. The government guarantees a portion of the interest should the borrower default and a shortfall occurs.

In April, Housing Minster Margaret Beckett announced that Lloyds Banking Group, including Halifax, Bank of Scotland and Royal Bank of Scotland, including NatWest, were supporting the Scheme. They were recently been joined by Northern Rock, Bradford & Bingley, Cumberland Building Society and Yorkshire & Clydesdale banks.
However, not all lenders are advocates and Barclays, Abbey, Nationwide and HSBC have not signed up. Recent media calculations show that a homeowner with a £150,000 interest-only mortgage at 5% would make repayments of £625. Under this Scheme, payments reduce to £187.50 and the difference of £437.50 is added to the mortgage. After two years, the loan has increased by £10,500 to £160,500 and repayments would rise to £669.

Only households that are five months or more in arrears are eligible for the scheme, which Sara-Ann reckons is useless: “Lenders tend to start repossession hearings after three months, so it’ll be too late by then. Also it’s never a good strategy to defer payments as these figures illustrate - you’re just increasing the amount you owe in the long term.”

She concludes: “Mortgage arrears are in freefall – 205,300 in the first three months of this year – and PPI is the only tangible support scheme that can combat this. It makes repayment and interest payments for up to a year, effectively reduces the overall amount owed, and provides support services to help you get a job. No Government or lender scheme offers this – all they do is increase the debt and frustrate millions who are unable to claim, leaving them high and dry.”

Low-cost PPI is available from independent providers such as British Insurance who are widely-recognised as offering more competitive premiums and comprehensive benefits than credit providers.

These hard-pressed times have prompted banks and building societies to introduce a number of money education schemes. They’ve been launched in an attempt to make consumers more financially-savvy and despite them described as offering independent and impartial advice, Payment Protection lobbyist Sara-Ann Burgess from specialist firm, Burgesses, thinks otherwise.

She is sceptical about their altruistic motives – referring to findings from the Competition Commission‘s investigation into the PPI sector and citing Which? feedback on NatWest’s MoneySense service.

Sara-Ann says: “Let’s not forget the morals of the High Street banks and building societies were seriously questioned by the Commission after learning these PPI providers sell 80% of the policies in the market, take over 70% of premiums in commission instead of using it to pay claims, encourage customers to waste £350m a year on cover that fails to pay out and lures borrowers with low APR rates and then adds PPI onto the loan, dramatically increasing the APR.”

The Commission found issues with over-pricing, product design and irresponsible/pressurised sales, asked whether lenders were using PPI products to clear their debts and stated they were seriously harming the interests of consumers. In June 2008, it criticised providers for overcharging consumers £1.4bn a year – representing a 490% return for the 12 largest distributors.

Sara-Ann continues: “Now all of a sudden, these ethically-barren organisations have turned over a new leaf and are jumping at the chance to launch initiatives for the good of the consumer. We all know there’s a hidden agenda to push their products even more and so prop up their failing profits and my suspicions are beginning to be confirmed.”

Earlier this month, Which? released its mystery shopper findings indicating NatWest’s MoneySense service was far from impartial. The service was promoted on national television, explaining how MoneySense advisers in 1000 branches were there not to sell, but to give free impartial financial guidance. When researchers put this to the test, they found that only four out of 20 branches provided impartial advice without an attempt either at, or after the meeting, to interest customers in new products.

In some instances, the advisers spoke exclusively about NatWest products, made no reference to shopping around for the best deal and passed enquirers onto customer service advisers. When asked about what products offered the best rates, a NatWest product was offered, despite it being one of the least competitive.
The Financial Services Authority is piloting a Money Guidance Service in the North West and only last week the Nationwide launched a Money Active scheme working in a three year partnership with the Citizens Advice Bureau. Nationwide announced it was investing three million pounds to fund the training of 1300 CAB volunteers to run financial education sessions that are set to benefit 10,000 people.

Sara-Ann concludes: “It’s been made clear the financial sessions will be run by impartial, independent volunteers and rolled out in an increasing number of CAB offices over the years. I sincerely hope this is the case, as we’re beginning to find out that schemes launched under the guise of impartiality are failing to live up to expectations.

“I also wonder why millions of pounds are being investigated in a scheme for the ‘greater good’, when technically it will do little to boost Nationwide’s coffers. What strategy will Nationwide use to recoup these millions? The optimist in me says the scheme is being launched for the greater good and to help consumers avoid getting into a financial crisis, but the pessimist worries volunteers will feel compelled to plug their products.”

News that home repossessions in the UK have risen by 50% in one year is shocking and indicates that High Street lenders’ actions speak louder than their words, says Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses.

The Council of Mortgage Lenders reports repossessions shot up to 12,800 in the first three months of this year – a dramatic increase from 8,500 in Q1 2008. And this is despite assurances from the CML that its members do not want to repossess if a realistic alternative solution can be found.

Sara-Ann believes that as job losses continue to stack up and borrowers fall behind with their mortgage repayments, more and more homeowners could find themselves without a roof over their heads unless they take action now to avoid becoming yet another lender statistic.

She explains: “Lenders are working hard to appear sympathetic to customers’ financial difficulties, but these statistics show this is far from the truth. They claimed months ago that repossession would always be a last resort, so why have so many people lost their homes in the first three months of this year? Borrowers must not rely on the goodwill of their mortgage company to keep them afloat when times are tough, instead, they should consider other options.”

Already this year, the number of homeowners with arrears of more than 2.5% the mortgage balance has spiralled to 205,300 – a 62% increase from 127,000 in Q1 08. Sara-Ann has for months called for lenders to introduce compulsory PPI with all new mortgages, and foot the costs themselves; however her request is being ignored.

She continues: “I cannot understand why they’re not doing something that will relieve the pressure on them and their customers. After all, it’s the insurance industry that will foot the bill for the claims, so it’s a win, win situation for lender and borrower. PPI will not only reduce the number of repossessions, but cut down the cases of people in mortgage arrears.”

Also known as Accident, Sickness and Unemployment cover, PPI pays the mortgage for up to a year if the policyholder loses their job, has an accident or becomes sick and is unable to draw an income. Sara-Ann suggests that if lenders are unwilling to offer this cover, free of charge, then borrowers may want to pay out themselves for a low-cost policy sourced from an independent provider: “British Insurance charges £20.40 a month for an unemployment-only policy that ensures a return of £600 a month, paid direct to the lender if redundancy strikes. This is the only tangible solution that covers the mortgage in the absence of a salary or savings.”

Although the Government introduced a number of measures to help borrowers cope in these recession-hit times, evidence suggests more radical solutions are necessary.

Money charity Credit Action says that the Government’s Mortgage Rescue Scheme is failing indebted homeowners. It reports only three households have been able to clear their debts by selling their properties to either the local council or a housing association and renting them back.

The Mortgage Support Scheme, which allows the recently unemployed to defer up to 70% of their mortgage interest payments, has also come under fire from critics who suggest it does little more than increase homeowners’ indebtedness. Less money paid into the mortgage now, builds up the amount owed later on, with extra interest.

Sara-Ann comments: “Whilst all these schemes are well intentioned, they will not help improve the financial situation of the thousands who at risk of losing their home - all they do is increase future debt. I’d much rather see a solution such as PPI put in place, it is the only way to reduce the overall amount owed in the long term and provide some much needed financial breathing space for the borrower.”
Credit Action reports one home is repossessed every 10 minutes, confirming Sara-Ann’s view that lenders are far from sympathetic when it comes to keeping people in their homes. She concludes: “I’d like to believe the CMLs claims that repossession figures will go down in the next quarter, but I’m not convinced this will be the case. If lenders were really keen to act in the best interests of consumers, they’d introduce a scheme that benefits more than a handful of people and avoids debt escalation.”

Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses is reminding people that if they do not have any savings to fall back on in times of hardship, they can always take out cover that either provides a monthly income or pays specific loan or credit card bills, should they lose their salary.

Feedback from credit reference agency Callcredit prompted Sara-Ann to give this advice after it emerged that 21% of the UK population does not have any savings at all and 38% could not survive beyond one month on their reserves.

The agency released statistics after quizzing over 2030 respondents in April. It also found one in four are not currently saving, 65% are more concerned about their financial situation than they were a year ago and 41% do not believe their situation will improve in 12 months time.

Sara-Ann comments “People who are without an emergency back-up plan such as savings, must consider other ways to maintain financial stability should their income become interrupted. Redundancy is the major threat, but an accident or sickness could also affect earnings and a person’s ability to meet their financial commitments.”

Figures released by the Association of British Insurers, indicate that despite PPI claims figures increasing in line with spiralling redundancies, very few people who lose their jobs receive monthly mortgage payments, courtesy of this cover. In January, 32,077 claims were received – a 203% increase on the previous year’s figure of 10,581.

However, it only represents around 1.45% of the 2.2million unemployed between January and March.

The Council of Mortgage Lenders confirms less than one in five borrowers with mortgages continue with their PPI policies, despite them paying loans for up to a year if job losses occur. Sara-Ann continues: “There’s appears to be a general malaise surrounding PPI - people have no desire to set aside a small amount to buy something that prevents debts mounting and yet very few have enough to pay one months worth of bills, let alone the three months that experts recommend you set aside for a change in circumstances.”

She concedes that if people are unable to spare cash to put into a savings pot, it’s unlikely they’ll have enough to pay into a PPI policy. However, feedback from Uswitch on the number of households shelling out for digital television, suggests consumers do have the funds, for what in Sara-Ann’s view, are luxuries.

Uswitch says 89% of households have digital on their main tv set and collectively they pay more than £5bn a year for the service. This is 23% more than was spent on digital tv in 2008 and equates to an average of £228 per household.

Sara-Ann responds: “This shows that people do have funds to spend on a financial safety net, if they wanted to. For £17 a month - less than households spend on digital tv - you could buy a policy from an independent provider that pays £500 worth of bills every month for up to a year. Those unwilling to give up their extra channels and rely on Freeview instead, could perhaps consider cutting back on their digital bundle and make savings that way.”

With BT announcing 15,000 job losses across the UK this week and predictions that unemployment will top three million by the end of the year, Sara-Ann is asking consumers to assess their priorities, and if they are without savings or have depleted funds, look for another source of income to pay future bills.

She concludes: “It’s wise to have some sort of back-up plan and in the absence of savings, there are low-cost policies that provide financial stability. Money spent on luxuries now, will not pay for those necessities if a salary goes.”

Standalone firm British Insurance charges £3.40 per £100 of benefit for unemployment cover. A person spending £17 a month or £204 annually, would, in the event of redundancy, receive £500 a month or £6000 a year.

News that consumers are increasingly bartering to ensure they get the best deal for goods and services comes as no surprise, says Payment Protection Insurance lobbyist Sara-Ann Burgess from specialist firm Burgesses. “But what is surprising,” she comments, “is that more people don’t use the same tactics and scrutinize what they’re getting for their money when it comes to PPI.”

According to comparison website uSwitch, 73% of UK adults are loathe to pay full price for items and undertake a variety of money-saving activities to help boost their coffers. These include; cutting hair, stopping tipping in restaurants, using meal discount vouchers, saving small change in a piggy bank and taking packed lunches to work.

Despite watching the pennies in everyday activities, Sara-Ann believes consumers are more free and easy with their cash when it comes to PPI -.insurance that provides a monthly income to meet a variety of bills or make specific payments for a loan or mortgage, should the policyholder lose their job, become sick or have an accident.

She explains: “People are regularly encouraged to shop around and save money on their mortgage deals and general insurance premiums, but I fear PPI is overlooked. Consumers tend to buy the cover that’s offered by their loan provider, often in the mistaken belief it will help with their credit application. As a result, they’re shelling out for premiums that are often four times more expensive for mortgage protection, five times for income and 10 times for loan cover. And in many cases, these policies have so many exclusions they would never pay out on the claim.”

A view borne out by research undertaken by Which?. The consumer champion estimates there are around six million policies in force in the UK and reckons between 1.7 and 2.1million people will have their claims rejected because they fall foul of the exclusions. It is this figure that disturbs Sara-Ann.

She continues: “Consumers are generally very careful about spending money and accounting for every penny. But there are instances where cash is literally being poured down the drain every month because people are not checking the small print on their policies or shopping around for a better deal with cheaper premiums and superior benefits.”

As well as meeting the financial commitments if an income is interrupted, independent PPI providers, such as British Insurance, include partial cover on pre-existing conditions, plus stress and back-related conditions (two common reasons for sickness absence and excluded on other policies).

The firm also insures people who are renting and in shared ownership schemes, alongside homeowners, and is one of a few to still offer unemployment-only cover at a time when job losses are rising.

It offers; back to day one payouts, age-rated premiums, a choice of cover options, carer support and a free back to work service for claimants with unemployment cover. Benefits include; self help guides, access to a specialist website, a job vacancy database and telephone advice via employment counsellors. Claimants can get ongoing support and guidance on work searches, career changes, state benefits, managing time effectively, tips on CV preparation and help with interviews.

Policies have free Health, Employment and Legal Protector cover, provide 24/7 health and legal helpline services, plus Legal Expenses in relation to employment and bodily injury disputes. The legal advice line aids people with personal legal problems, whilst the health and medical helpline provides information on general health and non-diagnostic matters such as allergies, side effects of drugs and health service waiting lists. The counselling helpline also offers a confidential service with onward referral to relevant voluntary and professional services where appropriate.

Sara-Ann concludes: “This is a comprehensive list of benefits and I would urge consumers with PPI to check what they’re paying for their cover and assess what support they will receive if they have to claim. 98% of policies are sold at the time of the credit application, so I urge consumers to compare providers, determine how their policy stacks up and if they’re unable to barter for a better deal, switch to another insurer. I fear the money saved on packed lunches and hair cuts is being spent on over-inflated premiums and sub-standard cover.”

Attempts by housing-related trade bodies to bring back Mortgage Indemnity Guarantee schemes demonstrate, yet again, how keen members are to put their own financial well-being ahead of consumers. This is the view of Payment Protection Insurance lobbyist Sara-Ann Burgess, who says elements of the recently-published Association of Mortgage Intermediaries’ report - The Mortgage Market, Fiscal Stimulus - are misguided and ill-considered.

Mortgage Indemnity Guarantees or MIGs are single premium insurance policies designed to protect lenders against financial loss if a property is repossessed. The borrower pays the premium up front and if the loan defaults and repossession looms, the policy is claimed upon - ensuring the lender is reimbursed the amount it loaned. As is the case of single premium PPI, which can no longer be sold at the end of this month, MIGs provided lenders with high profits, but little benefits for consumers. As a result, demand for this product petered out.

AMI says it should be re-invented and is calling for the Government to partially underwrite the policy in a secondary capacity, relieving pressure on insurers. The Building Societies Association also supports a re-introduction of this scheme, stating it would allow members to offer higher Loan To Values above 70%.
Borrowers without hefty deposits are keen to borrow the full purchase price of their property, however lenders will only currently release funds that equate up to 70% of the property’s value. AMI argues that if lenders had assurances, courtesy of MIGs with negative equity guarantees, they would release more funds and so kick-start the housing market.

But Sara-Ann says this is irresponsible and will encourage consumers to borrow beyond their means – just as they have done before. She comments: “Is this the best they can come up with - bringing out a product that was discredited years ago? It’s being dusted off and sold as a consumer benefit by saying it will allow consumers to borrow more. The more they borrow, the harder it will be to meet those commitments but this doesn’t appear to worry lenders. If their customer has a MIG, they’ll get a nice return on the property, leaving the homeowner out in the cold – literally.

“That’s no benefit, and as for asking the Government to partially fund this hare-brained idea … billions of pounds of tax-payers money is already being used to prop up other schemes, so we don’t need any more – it’s a complete fallacy.”

The report says with mortgage funding and consumer confidence reduced, the need for a targeted fiscal stimulus is required immediately. This measure, along with other recommendations such as; abolishing Stamp Duty/Land Tax and Home Information Packs, re-introducing Mortgage Interest Relief at Source and Real Estate Investment Trust, plus setting up tax-free savings accounts, AMI believes, will support consumers to become homeowners.

Sara-Ann counters it will simply increase levels of indebtedness. She continues: “The report confirms first time buyers are borrowing 5.1 times their earnings and even says jobs that might have looked safe a month or two ago, no longer do. So how can they come to the conclusion that vulnerable consumers should be saddling themselves with more debt, via higher loans and paying up front for an insurance policy that might clear their mortgage, but will not keep a roof over their head?

“If the Association truly does have the best interests of consumers at heart – it should recommend including PPI with every mortgage offer and if it’s so intent on asking the Government for help, should request it partially underwrites these policies? Consumers and lenders would both benefit then.”

PPI will meet mortgage repayment costs for up to a year if the borrower is made unemployed or suffers an accident or sickness. In Sara-Ann’s opinion this is a much better way to instil confidence in nervous lenders and consumers. She concludes: “PPI is far more effective as it protects lenders and customers against unforeseen circumstances. Lenders will still receive their payments, as the money can go direct to them, and consumers will keep their homes.

“Alternatively, AMI’s members should focus their efforts on sourcing PPI that’s affordable and offers extensive benefits and support services. This wouldn’t involve any discussion groups, meetings or Government intervention – just practical support to borrowers who need it now.”

Policies can be sourced from independent firms such as British Insurance. It’s widely-recognised as offering market-leading products with competitive premiums, has won more awards than any other PPI provider and has never received a product or service complaint.