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Mortgage advisers 'are failing' Mortgage advisers 'are failing'
(40 minutes later)
Many mortgage advisers give poor advice to customers, according to research by the consumers' association Which?.Many mortgage advisers give poor advice to customers, according to research by the consumers' association Which?.
Its researchers posed as customers when visiting 50 banks, independent advisers and estate agents.Its researchers posed as customers when visiting 50 banks, independent advisers and estate agents.
They found that just four gave advice to an acceptable standard, with 41 failing to provide at least one key piece of information.They found that just four gave advice to an acceptable standard, with 41 failing to provide at least one key piece of information.
Which? said many advisers appeared more interested in selling insurance rather than giving tailored advice.Which? said many advisers appeared more interested in selling insurance rather than giving tailored advice.
"Too many of the advisers that we visited took a 'one size fits all' approach or seemed as concerned with selling an insurance policy on the side," said Martyn Hocking, editor of Which? Money."Too many of the advisers that we visited took a 'one size fits all' approach or seemed as concerned with selling an insurance policy on the side," said Martyn Hocking, editor of Which? Money.
Certainly there are some aspects to this report which are worrying Ray Boulger, John Charcol mortgage brokersCertainly there are some aspects to this report which are worrying Ray Boulger, John Charcol mortgage brokers
"There are still more than 3,000 mortgage deals out there, and the difference in cost can be thousands of pounds a year, so it's vital people do their homework and choose their adviser with care.""There are still more than 3,000 mortgage deals out there, and the difference in cost can be thousands of pounds a year, so it's vital people do their homework and choose their adviser with care."
Which? said it had reported the mortgage advisers that performed poorly to the Financial Services Authority (FSA).Which? said it had reported the mortgage advisers that performed poorly to the Financial Services Authority (FSA).
RegulationsRegulations
The Which? researchers visited advisers in England and Scotland between February and April this year.The Which? researchers visited advisers in England and Scotland between February and April this year.
Of these, 24 were banks or building societies, 13 were estate agents and 13 were independent mortgage advisers.Of these, 24 were banks or building societies, 13 were estate agents and 13 were independent mortgage advisers.
Which? said 41 of them failed to give the researchers all the information required by the regulations of the FSA.Which? said 41 of them failed to give the researchers all the information required by the regulations of the FSA.
This meant they failed to say if their services involved giving advice as well as information, they failed to show the customers an initial disclosure document, or they failed to give them a "key facts" illustration.This meant they failed to say if their services involved giving advice as well as information, they failed to show the customers an initial disclosure document, or they failed to give them a "key facts" illustration.
Only four managed to do these things while also checking if the customers could afford the mortgage, explaining properly the type of deal on offer, and then advising if it was suitable or not.Only four managed to do these things while also checking if the customers could afford the mortgage, explaining properly the type of deal on offer, and then advising if it was suitable or not.
Two-thirds of the advisers tried to sell the researcher an insurance policy at the same time, which Which? claimed was usually unsuitable for the customer.Two-thirds of the advisers tried to sell the researcher an insurance policy at the same time, which Which? claimed was usually unsuitable for the customer.
'Worrying' 'Not typical'
Ray Boulger, from John Charcol mortgage brokers, told the BBC that while the research highlighted some areas of concern, only a small number of brokers were actually investigated - 50 out of 30,000 mortgage advisers working in the UK. The Association of Mortgage Intermediaries (AMI) said people need to realise that there is a clear difference between an independent adviser and a salesman in bank or building society.
"Certainly there are some aspects to this report which are worrying," he said. "Independent mortgage advisers provide advice that is wholly focussed on the individual consumer's needs," said Chris Cummings of the AMI.
"It's also true to say that the independent advisers came out of this much better than the banks or the panel advisers," he added. "In contrast, banks and building societies may offer only generic information.
"But, certainly it's clear from some of the points they make, that some brokers need to improve their act." "The study found that although there was a general failure among mortgage advisers to give acceptable mortgage advice those that performed best were independent mortgage advisers," he added.
A spokesman for the British Bankers' Association said the experience of advice in bank branches was not typical. But a spokesman for the British Bankers' Association said the researchers' experience of advice in bank branches was not typical.
"The Which? survey covered only 19 bank branches and we do not accept that the low standard of service reported by Which reflects the overall level of service offered by bank mortgage advisers," he said."The Which? survey covered only 19 bank branches and we do not accept that the low standard of service reported by Which reflects the overall level of service offered by bank mortgage advisers," he said.
"Clearly if a customer feels that the adviser has been unable to answer their questions satisfactorily or is not providing the high standard of advice that they should be getting, they should take this up as a formal complaint with the bank concerned.""Clearly if a customer feels that the adviser has been unable to answer their questions satisfactorily or is not providing the high standard of advice that they should be getting, they should take this up as a formal complaint with the bank concerned."
No improvementNo improvement
David Elms from unbiased.co.uk, which is the website of the industry body for independent financial advisers (IFAs), stressed the importance of taking independent advice.David Elms from unbiased.co.uk, which is the website of the industry body for independent financial advisers (IFAs), stressed the importance of taking independent advice.
"Whole-of-market IFAs are the best-positioned of all advice types to serve consumers' needs when it comes to mortgage advice," he said."Whole-of-market IFAs are the best-positioned of all advice types to serve consumers' needs when it comes to mortgage advice," he said.
"As the housing market has begun to slow we have continued to see consumers putting their faith in IFAs to advise them on how to finance their home loans.""As the housing market has begun to slow we have continued to see consumers putting their faith in IFAs to advise them on how to finance their home loans."
At the beginning of 2007 similar research by the FSA found that only one-third of mortgage advisory firms could show they had given their customers suitable advice.At the beginning of 2007 similar research by the FSA found that only one-third of mortgage advisory firms could show they had given their customers suitable advice.