Mortgage Payment Protection Insurance (MPPI)

Read details of the agreement drawn up between us and the MPPI industry to ensure customers receive fair treatment, outlining the action firms should take and where you can find further information.

Firms that this affects

This clarification is intended for any intermediaries or underwriters involved in selling insurance policies that customers might use to protect mortgage payments.

This includes:

  • MPPI
  • Accident, Sickness and Unemployment (ASU) cover
  • some short-term income protection policies

Actions your firm should take

Under the terms of the agreement, all affected firms should have:

  • proactively refunded increases in premiums and reversed any reductions in cover for customers who had experienced these changes to their policy in 2009
  • offered to reinstate policies where a customer had cancelled it within 2 months of an increase in premium or reduction in cover made during 2009
  • amended any existing MPPI contracts to ensure that all customers were made aware of the situations in which firms have the right to vary premiums and cover
  • revised your contracts with new customers to ensure terms were drafted fairly and are adequately disclosed

When you tell your customers about the agreement, you should:

  • explain how your firm may vary or cancel the contract according to fair variation and cancellation terms
  • clearly remind them of their rights to complain
  • write to them if you intend to increase their premiums, giving at least 2 months’ notice, and explaining why the premium may be increased and/or cover decreased


In 2009 our review found the variation clauses in a significant number of live MPPI contracts could be unfair under the Unfair Terms in Consumer Contracts Regulations 1999. The variation and cancellation clauses in many of these contracts were also not, in our view, adequately disclosed as required by our Handbook’s Insurance Conduct of Business Sourcebook.

At the start of 2009, some firms gave customers notice of their intention to increase premiums and /or reduce cover. Around half the firms reviewed followed through the increases, while a significant number put their pending increases on hold in light of our concerns. Following discussions we held with trade bodies it was agreed the actions above would take place.

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