In the wake of the Financial Services Consumer Panel’s criticism of the regulator’s proposed ban of non-advised sales, I could not believe the arrogance of many of the comments left on Mortgage Strategy Online about consumers’ ability to manage their own affairs.
One commentator states that they regularly meet people who don’t know whether they have a repayment or an interest-only mortgage, never mind whether it’s got an early redemption penalty.
They went on to say that “the public would not deal with mortgage finance more than once every two years and often more infrequently”.
They added that “under these circumstances I don’t believe most people would find the deal that they want without professional help”.
Such comments exhibit symptoms of ’we know better than you’ syndrome.
I would certainly support the call for quality research in this area with regard to consumer knowledge of financial products since it could undermine the sanctimonious attitude of many advisers.
While I was at school I was good at calculus. A few years later I picked up a book on calculus and could not remember the first thing about it. I suspect a similar process occurs with purchasers of financial products. Advisers know the products because they work with them day in and day out. Consumers take on board the knowledge only for the time it is required.
The regulator is deifying advice and brokers are following down that blind alley. For once the FSCP has raised a point that is worth discussing
The brokers who left comments questioning consumers’ knowledge are implying they are too stupid to make a decision because they do not remember at a later date what they fully understood at the time the decision was made.
I suspect a sizeable portion of those using advisers are less interested in the advice than they are in delegating all the administration associated with the research and the implementation. But they are aware of the decision being made as are people who do everything themselves.
These commentators are basically sneering at these people.
Advice is valuable, especially quality advice. But it should not be a compulsion. That is not how a free society works. People should even be allowed to make their own mistakes.
Advisers will give bad advice, sometimes through negligence and sometimes by accident. To aim for perfection is to create a cost burden that is more damaging than the damage it trying to avoid.
The Financial Services Authority is deifying advice and advisers are following it down that blind ally. Advice is a commercial service not a religion.
For once the FSCP has raised a point worth discussing. I doubt many will enter that discussion from either side of the regulatory divide because it doesn’t gel with current prejudices.
Bank employees will welcome being able to offer clients advice
Reading Mortgage Strategy over the past few months there seems to be a feeling that once an advised process comes in banks and building societies will struggle.
I worked as a mortgage broker for eight years but for the past two I have worked in a building society. The hardest thing I have found is not being able to give advice.
Eventually, when I am able to give advice once more, it will be so much easier as customers look to us to help them and it can be frustrating when you have to bite your tongue.
I am not alone in this. The majority of my colleagues in other branches are experienced and many will also welcome the change.
The main difficulty will probably be in companies’ head offices where processes and procedures have to be rethought and rewritten.
As far as the boots on the floor are concerned, the changes may be quite welcome.
We have an amazing ability to adapt to changes in market
Last week was a busy one and we were able to place 99% of the enquiries we received.
Aside from the conversion rate, what impressed me is the way my colleagues have responded to the recent lender announcements and managed clients’ expectations accordingly.
Gone are the days when I hear them over-promise something and then try to flog a dead horse by begging lenders to take a view on a case.
I don’t agree with the sudden demise of interest-only. I also struggle with our new forced best advice to most clients that for them to get the lowest rate they have to switch to a repayment deal and review their term.
But whether I agree with it or not is irrelevant as these are the tools we have at our disposal so we have to use them.
Like having a new set of golf clubs, we are now getting used to the new rules and showing yet again the amazing ability of mortgage brokers to bounce back.
To paraphrase Gloria Gaynor – we brokers will survive.
It seems to me that Abbey is not really for intermediaries
Has anything become more ridiculous than the term Abbey for Intermediaries?
This lender is operating a policy that is a contradiction of all that implies. Its BDMs must be in fear of their jobs as mortgage applications from advisers slowly become a thing of the past.
Its almost weekly changes in criteria defy all logic. Speaking with people at Abbey is now akin to having a discussion with the government of North Korea.
There is a basic unfairness and lack of common sense with its attitude to brokers.
There is no consistency among underwriters who operate under different criteria to the advice that their sales people may give you prior to submitting an application.
Abbey has gone from being a lender of first resort to one that zealously seeks to punish advisers who fail to comply with its illogical business requirements.
In the distant days when Abbey was first taken over by Santander I recall my then BDM telling me that Santander had no idea what Abbey for Intermediaries was about, except of course that it represented almost a third of Abbey’s business.
Somebody in the bank must either be stupid or have a death wish in being happy to both ignore and annoy its so-called business partners.
Mortgage industry is always different, but always the same
As we come into the fifth year of the post-credit crunch years the mortgage boom of the preceding decade starts to feel like another age.
There’s nothing like music to cement a bit of nostalgia. Check out the only song I have ever heard that refers to self-employed mortgage applications, Mountain Energy, by punk band The Fall in 2003.
“Mr Blairstow and Mr Partridge
They said to me
To get a mortgage
You need an income letter
I thought it was free”
Broadcaster John Peel said of the Fall – Always different always the same – but he could have been talking about the mortgage industry as well.
Stirling Partners Finance
I stalled once but it is good to be back in the driving seat
When the packaging market fell flat on its face in 2008 the rug had been pulled from under my feet.
Back then I was managing director of the Barnet-based packager KGB Packaging. I spent six years building the company from scratch and seeing it flounder was a bitter pill to swallow.
With hindsight I bit the bullet and called time at the right moment; it was the hardest decision I have ever made.
I looked around for opportunities but found little to excite me.
Former colleagues were moving away from financial services and entering unfamiliar territories. The mood in the industry was pretty depressing.
But in early 2009 the chance came up to become franchise director of both PruProtect and PruHealth for central London.
I jumped at the chance. I was primarily attracted by the opportunity to grow my own business again and this time with the strength of a major brand behind me – frankly, it was a no-brainer.
A key driver for me has been the ability to get back in touch with old broker friends, but also to develop new relationships.
The changing landscape has caused many businesses to review and rethink their proposition and many have undertaken radical changes.
They are now looking to focus on protection to create mutually sustainable businesses and it’s fantastic to be part of that.
PruProtect and PruHealth
Using affordability calculators did not add up for lenders
In response to the news that Leeds Building Society is scrapping income multiples and will use its new affordability calculator, I’ve never been convinced by affordability calculations as they are not transparent.
It is like adding another tier to credit scoring and is subject to the same degree of manipulation.
I know income multiples are old-fashioned and in some ways anachronistic but most building societies have used them successfully for decades.
It was mainly the larger lenders that tried to automate their entire systems that actually disappeared from the marketplace, and many of those had an affordability calculator. I always say that if it ain’t broke…