Regulator steps in following concerns of unfair premium hikes spurred by the recession
Insurers and banks will refund up to £60m to consumers, following an agreement last week with the FSA over mortgage payment protection indemnity (MPPI) policies.
Insurers will reverse increases in premium and reductions in cover for consumers whose policy terms changed in 2009. They will offer to reinstate policies where a customer had it cancelled within two months of an increase in premium or reduction in cover during 2009; freeze cover and premiums for existing customers until the end of this year; and ensure customers are told of future changes.
The FSA stepped in earlier this year amid concerns that insurers and banks were changing policy terms and hiking premiums mid-term because of the recession.
FSA managing director Jon Pain said: “The FSA welcomes this positive move by MPPI firms to reverse recent changes in premiums or cover, which will put affected customers back in the position they were in before the policy was changed.”
ABI director-general Stephen Haddrill said: “Lenders and insurers will work together on a thorough review of their policy terms and conditions, marketing material and any changes made, such as a premium increase, since the start of 2009 and make any refunds in line with the agreement.”