Mortgage PPI firms to refund £60m

The FSA and Mortgage Payment Protection Insurance (MPPI) firms have agreed to refund approximately £60m to customers by the end of 2010.

The announcement follows FSA concerns over recent increases in premiums, the reductions in the cover which customers get under their policy and the disclosure of these terms.

Under the deal, the industry will refund increases in premiums and reverse any reductions in cover for customers who have experienced changes to their policy in 2009.

The firms will offer to reinstate policies where a customer had cancelled it within two months of an increase in premium or reduction in cover made during 2009.

Premiums and cover for existing customers will be frozen for at least the remainder of this year.  MPPI contracts will be amended to ensure all customers are made aware of the circumstances under which firms can vary premiums and cover.

Jon Pain, managing director of supervision at the FSA, says the changes will provide clarity to customers about when and why firms will be able to vary terms.

He adds: "This clarity will provide the basis for MPPI to remain a valuable option for many mortgage customers who wish to take out protection alongside the mortgage commitment they are taking on."