There are many laws and statutes that affect mortgage protection insurance. Insurers and distributors are bound like any other company to the laws of the land. These may cover advertising, sales of goods, and contract law. Below are a few of the more important ones.
The Financial Services and Markets Act 2000
This was the act that gave birth to the FSA and allowed the Regulated Activity Orders and Financial Promotions Orders as secondary legislation.
The Data protection Act 1998
Before mortgage protection insurance is sold it is necessary to obtain consent from the customer to use their details for the administration and claims handling. Specific mention needs to be made of the sensitive data given that medical records need to be viewed.
The use of customer’s data for fraud prevention also needs to be mentioned in advance.
The Access to Medical Reports Act 1995
This allows insurers to ask for medical reports when dealing with claims, but only where the customer has given his prior agreement for them to do so. It also gives the customer the right to view his own records. Policies usually indicate that it is a condition of the mortgage insurance policy that customers provide that permission, if reasonably required by the insurer.
The Disability Discrimination Act 1995
This outlaws discrimination on the grounds of disability unless there is sound evidence that the disability is relevant to the circumstances.
This means that customers can not be declared ineligible for insurance simply because they are ill on the day the insurance starts. Many policies had to be changed because they insisted that customers had to be ‘in good health’ on the day the insurance started.
Consumer Credit Act 1974
The consumer credit act impacts on mortgage protection insurance since it applies to most of the lending agreements to which mortgage protection insurance is applied. The act is currently being reviewed and proposals are being drawn up to amend it so that mortgage protection insurance and the like are shown separately from the loan and a separate signature obtained from the customer to show that he/she is aware of the mortgage protection insurance.