Insurance mis-selling is rife, study reveals

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The Independent Online

The quality of financial advice on Britain's high street continues to remain dangerously poor, with questionable sales tactics and mis-selling still all too common, according to a new report from Which?, the magazine of the Consumers' Association.

The quality of financial advice on Britain's high street continues to remain dangerously poor, with questionable sales tactics and mis-selling still all too common, according to a new report from Which?, the magazine of the Consumers' Association.

A year-long undercover study by the group, published this week, reveals a catalogue of advisory failings by many of Britain's largest financial institutions. Just one out of the 39 companies which were mystery-shopped gave advice that Which? rated "acceptable".

Which? researchers posed as first-time house buyers, visiting banks, building societies and estate agents looking for advice on insurance products sold with mortgages. The majority of advisers left their clients either over-insured, under-insured, or buying unsuitable products.

The survey uncovered several instances where emotional blackmail was used to sell critical illness insurance . One adviser from Your Move estate agents was reported to have said: "I'm going to a funeral today for somebody that's 42 and has died of leukaemia." Another told clients that his cousin had recently been diagnosed with breast cancer.

Other advisers wrongly said that financial regulations meant it was mandatory to buy Mortgage Payment Protection Insurance (MPPI) with a home loan. While MPPI is a suitable product for most people to consider if they are taking out a mortgage, many advisers failed to point out important terms and conditions, such as the period during which you have to be off work before it will pay out.

The Financial Services Authority does not currently regulate mortgage or general insurance sales. However, both are set to come under its jurisdiction over the next few months. This will tighten the rules for advisers. However, Which? said many fall short of the necessary competency levels.

Malcolm Coles, the editor of Which?, said: "It's appalling to use scare tactics that could dupe people into spending hundreds of pounds each year on cover they don't need. We're glad a tightening up of selling practices is on the horizon, but we're not convinced it'll be enough. We think the FSA needs to do its own mystery shopping, and fine any company that breaks the rules."

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