Regulation  

Five things I learned about the Mortgage Market Review

“Furthermore, it was felt by many who went direct to lender that they were expected to attend numerous meetings, often with different members of staff,” read the report. “A frequent complaint focussed on initial meetings being taken by less qualified members of staff, meaning customers were then repeating themselves throughout further consultations.”

ESRO found that the flexibility of intermediaries and the speed with which customers can book an initial appointment, contrasts sharply with those who go direct to lender.

“Intermediaries are appreciated for their perceived flexibility and ability to work to the customer’s schedule. In particular the possibility of evening appointments at their own houses, was seen as an important plus point.”

4) Intermediaries, lenders and execution-only

According to the independent consumer report, many consumers mistakenly believe that lenders are not able to provide mortgage advice or give personal recommendations in the same way an intermediary can, although they struggled to articulate exactly why this view was formed.

A general lack of trust in financial institutions means that mortgage borrowers do not enter into the application process feeling the lender will ‘be on their side’ or interested in helping them make the best decision.

“There is a distinct sense that lenders do not act in the interests of their customers, but are rather more concerned with profit,” the paper added.

Meanwhile, intermediaries’ perceived expertise and independence brings trust.

Their supposed access to the best range of products is seen as a great benefit, while they can also facilitate a speedy application, with a ‘lighter touch’ on documentation and increased likelihood of acceptance by the lender.

Finally, the idea of non advised applications is ‘too high risk’ for many – mostly because they are worried about making practical mistakes, such as when completing forms online or misinterpreting certain terminology. “Some assume that because a mortgage is such an important purchase, you wouldn’t be able to buy one in this way,” the research noted.

5) Misleading disclosures

The FCA also identified isolated instances of advisers making misleading disclosures.

These included references to the regulator in terms of protection insurance and confusing descriptions of adviser fee structures.

“These practices are not acceptable,” the review warned. “We will take action where we identify firms that encourage advisers to make misleading statements to maximise sales, or do not take reasonable steps to manage the risk of advisers systematically misleading or pressurising customers to cross-sell products at the expense of customers’ best interests.”

peter.walker@ft.com