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Can selling mortgages in lenders’ branches be classified as giving advice?

Branch sales are not against the rules but can be misleading says one expert, while the other defends lenders’ right to inform consumers about their deals

Simon Robbins is director at Chase UK

If you look up the word advice in a dictionary, you will find it is defined as ‘guidance or recommendations offered with regard to a future action’.

Accordingly, the selling of mortgages in lenders’ bran-ches should be included in this definition – or should it?

The Financial Services Authority has made it clear that principles-based rather than rules-based regulation is the way ahead. So although there is no definitive pronouncement from the regulator laying down that salesmen in branches cannot claim they give advice, does this cover the commonly held belief about what constitutes advice?

If, as a consumer, you go into a branch and say what you would ideally like in a mortgage, do you believe you will be referred to a different lender in the shop next door whose products exactly meet your needs?

If not, are you being advised in the true sense of the word advice with your best interests at heart or are you being advised only on the products that happen to be available at that branch?

I understand that advisers in branches make it clear to customers that they can only give advice on that lender’s products during the consultation but by this stage, it’s too late for many people.

If you have had to juggle your life to make some free time to see an adviser, do you think you would have the inclination or energy to start shopping around? We don’t live in a world where we can visit any number of branches and get many appointments, all in a single day.

Inhouse consultations do not constitute mortgage advice, they simply present consumers with some product options. But Treating Customers Fairly should apply to potential customers too, shouldn’t it? The bottom line is that this is not against the rules but it is a little misleading.

Joe Rabbitt is head of intermediary development at Nationwide

We’ve always had literature in our branches encouraging borrowers to come in to find out more.

Some customers know what they want, others may want advice about our products. In these circumstances, the use of the word advice in our branch literature is within Financial Services Authority guidelines as we are not offering advice on any other lenders’ products – we are sharing information with consumers about our product range and offering them assistance in choosing the right mortgage for their circumstances.

As long as we set out our position in an Initial Disclosure Document, we are being compliant. Other lenders with branch networks also offer advice on their own products and advertise this in their branches – it is common practice on the high street.

If the rules change in the future we will revisit our branch literature to ensure we are still being compliant and fair to our customers.

Our branch staff are only able to offer advice on products available through Nationwide but we would encourage borrowers who want advice on the whole of the market to visit brokers. Giving information and advice in our branches about our own products does not mean we are encouraging consumers to avoid using brokers.

Our intermediary arm is just as important to us as our branch network and we have made a number of improvements to our broker proposition to reflect this. These improvements have been well received and we will be unveiling more in the coming months.

It’s down to consumers to decide whether they wish to receive information and advice on the whole of the market, but if they want to visit a branch of ours to find out what we can offer them, we are happy for them to do so.


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