Formal protection review requirement

In February Enable’s IFA’s in Bishop’s Stortford noted that Pink Home Loans advisers will be supplying  documentary evidence that they have discussed protection with their clients in every mortgage they arrange. Their brokers have been advised to ask clients to bring in their employment contract to illustrate what benefits they will be entitled to if they become too ill to work and the  borrower will be asked to sign a declaration if they do not wish to take the advice.

Making sure that clients understand that income protection might be worth thinking about is part of this move. Statutory sick pay rules mean employers must pay claimants at least £87.55 per week if they are ill, but most homeowners would struggle to meet their mortgage obligations on this.
Pink director Mark Graves said: “An adviser should, in every situation, be able to point out how long the client could maintain the mortgage and put food on the table if they suffered a long term illness or lost their job. In my experience very few consumers will be familiar with just how little they are likely to receive from their employer in the event that they are no longer able to work.”

Other networks however have no plans to follow the move. Homeloan Partnership commercial director Neil Hoare said members of his network are expected to discuss protection with each client but are not formally required to do so he said, “I don’t think we would introduce a formal policy whereby a protection chat is required, but brokers know that any poor outcomes experienced by their clients will lead to a review of the advice process and as a result, we expect them all to be taking the necessary actions to make sure this doesn’t happen.”

L & G Mortgage Club managing director Stephen Smith says: “A protection discussion is prudent and proper in any advice process but I would imagine many networks already recommend their members should do this."

Your home could be at risk you do not keep up your mortgage payments.