Advisers explained in Which? expose
THE vast majority of mortgage advisers offer their clients poor guidance, according to new research by Which?.
In an undercover investigation, the consumer champion found just four of the 50 experts checked gave “acceptable advice”, leaving borrowers at risk of paying too much for their loans, or being unable to afford repayments.
Posing as first-time buyers, researchers visited banks, estate agents and independent mortgage advisers. A shocking 41 of 50 experts failed to provide one or more pieces of key data about the deals they recommended, and 35 failed to do a proper check to ensure the person could afford to repay the mortgage.
Two-thirds of them tried to sell the researcher life or health insurance at the same time and many failed to match their advice with the individual’s requirements.
“Listening to people’s needs and giving tailored advice should be the bread and butter of a mortgage adviser’s job,” said Martyn Hocking at Which? Money. “But too many of the advisers we visited took a ‘one-size-fits-all’ approach, or seemed more concerned with selling an insurance policy on the side.
“With mortgage costs soaring and the spectre of negative equity returning to the property market, it is important that people get help to find the right deal.”
In previous Which? studies it has been “tied” advisers, mainly working for high street banks and building societies, who were the worst offenders for giving inadequate advice. Independent financial advisers, who can help select the best products from the entire market, traditionally fared better.
Which? said that in this study no particular type of adviser gave significantly better advice, although three of the four that passed the Which? test were independent. The fourth was from Alliance & Leicester.
The report cited one adviser who described the key-facts document they are required to provide as: “A lot of the stuff in there is just blah, blah, blah.”
Another dismissed the idea that interest rates might fall, just a few weeks before the Bank of England cut the base rate. A third tried to use Kylie Minogue’s breast cancer diagnosis to sell critical illness cover.
Chris Cummings, director-general of the Association of Mortgage Intermediaries, said: “It’s disappointing Which? has labelled all the people they saw as advisers because most of those they saw who work in banks and estate agents are not advisers — they are sales people.”
