The FSA is facing a tough choice, whether to give in to lenders who are moaning about increased costs or protect what is proposed regarding all mortgage sales. This was to say that all sales have to be advised. It would mean ending the ability to take a mortgage without advice for most people and this will protect them, especially as a significant number think they get advice but do not.
No more could you call the bank contact centre get given the list of products pick one and the bank bags a few year’s profit and the customer gets what could or could not have be a decent rates (my previous roles have been running these teams and setting the product pricing so I have some ‘form’ in this area)
Unsurprisingly the Building Societies Association and Council of Mortgage Lenders have come down on the side of ‘leave it alone,the clients are happy with this’ and it helps us lenders hold down costs, with the Council of Mortgage Lenders saying that it will add 1hr 42 minutes to the whole process if this was implemented.
Which made me think, if I was a customer would I want the fast track process that has no proven track record of delivering better deals for me, the customer or would I like someone to take a great deal more time, get to know my circumstances then offer me advice and document why?
It is a bit like asking someone to buy a car without a warranty, no doubt this is fine if you know your cars well and are prepared for the risk, but how many of us are in that position? And if you do know then you can make sure you are getting the right price, the upside for the no warranty position.
It is more likely the average customer wants some protection about the choice they have made for both cars and mortgage choices. In the case of mortgages that it suits their needs and was the best deal for them. Call centres offering no advice on either of these are the no warranty version. Talking to a mortgage broker for impartial advice is the best route.
The most dangerous thing about the current process is that most customers appear to think they are getting advice, even though the lender tells them they are not. You can imagine, you go to see ‘your’ bank, sit in the office with the young professional in the bank’s uniform and with his business card. He hands you some documents, one of which is a quote telling you your new payment and another is the document saying protected by FSA, own products and no advice, does it stand out a mile that this is not the service you wanted?
Customers go to their banks because they know them – this implies knowing what is good for them, at the moment this is not what is delivered. Imagine buying a car with a warranty but finding out it didn’t have one at all and the garage insisting they told you all along.
So watch this space to see if the FSA sticks to its guns and makes sure that people who think they are getting advice actually get it. No more mortgage without advice.
