There are times when you have to say enough is enough. After wading through the Financial Services Authority’s consultation paper on responsible lending it is evident many of the proposals will place an extra cost burden on firms and clients which defeats the regulator’s original objective.
The idea behind the Mortgage Market Review is to outline reforms required in the mortgage market to ensure it works better for consumers and is sustainable for all market participants. So what on the advice process?
A recent controversial press release from a well-known price comparison website related to the low number of deals available through brokers.
This was subsequently pulled because of potential discrepancies, but isn’t it time for the FSA to stress the importance of advice?
Maybe I’m missing something. Perhaps such a declaration was in a press release that slipped beneath the radar or maybe in a speech that wasn’t picked up by the media.
Or just maybe the regulator is happy not to get involved. But the rest of us know whole-of-market mortgage advice is vital for consumers.
Of course, some direct deals may be best for a small proportion of squeaky clean borrowers with perfect credit ratings, suitable income levels and a hefty deposit or a large chunk of equity who are happy not to shop around.
Campaigns such as the one currently being run by Mortgage Strategy should be applauded and supported
But there are also a number of high quality borrowers who do not have perfect credit ratings, are self-employed or don’t have a large enough deposit who require mortgage advice.
Stricter lending criteria have inevitably meant that mortgages have become more complicated, which means specialist knowledge is now even more valuable.
Some consumers may get better deals by going direct to lenders but do you really think most are well placed to go straight to a lending institution?
Are they equipped to get the deal that suits them best after having done all the necessary research and poked around the minefield of fees and tie-in clauses? I doubt it.
Professional whole-of-market brokers are dealing with the question of direct deals in a variety of ways.
Maybe we shouldn’t blame comparison sites for highlighting the number of direct deals available.
And perhaps we should give the regulator a break for not endorsing the advice process as much as it should.
But either way, it’s time to make our voice heard. As an industry we need to stress the importance of the advice process. Campaigns such as the one currently being run by Mortgage Strategy (pictured) should be applauded and supported.
Consumers should understand that it’s not only headline-grabbing rates or best buys that matter – it’s the advice that lies behind these that can help them make the most appropriate choice.