The Consumer Credit Act states that any insurance which a mortgage lender may require a borrower to take out and keep on a property:

• A. may be effected by the borrower with any insurer and through any intermediary.
• B. must be effected by the borrower with an insurer agreed by the mortgage lender.
• C. must be effected by the mortgage lender on behalf of the borrower with any insurer and through any intermediary.
• D. may only be effected by the borrower with tied agents of the mortgage intermediary.

Answer: (A)

The main rule here is that the borrower has the freedom to arrange the insurance the lender requires with any insurer and through any intermediary. The Consumer Credit Act protects you from being locked into a lender-picked insurer or a tied broker, so you can shop around for the best terms and still meet the loan’s requirements. As long as the policy provides appropriate cover for the property and you can show evidence of keeping it in force, the lender should be satisfied.

The other options imply restrictions—forcing the borrower to use a lender-approved insurer, or to go through only tied agents, or to have the lender arrange the policy themselves. Those restrictions aren’t consistent with the Act, which is about ensuring you can choose freely among insurers and intermediaries while meeting the mortgage insurance requirement.