Which? has already admitted that one of its key criticisms – that advisers working for major high street names failed to make it clear that they could only recommend their own company's mortgages – applies to independent advisers, not tied advisers.
Ron Stout, public relations manager at Northern Rock, says: “The only specific area we could identify was incorrect and Which? has accepted that. But as the research stands, it's too general and we await more specifics.”
In the mystery shop, seven researchers posing as first-time buyers visited 39 banks, building societies and estate agents between September 2003 and January 2004. They visited Abbey, Barclays, Bradford & Bingley, Connells, Halifax, HSBC, Lloyds TSB, Mann Countrywide, NatWest, Nationwide, Northern Rock, Sequence, Spicerhaart, Team and Your Move, plus seven independents.
They found that seven advisers did not mention the Mortgage Code, while 14 gave misleading information about it. In addition, 21 advisers failed to properly explain the ways to repay a mortgage and 23 didn't clarify the different deals available.
Advisers were also found to concentrate more on selling protection insurance, on which they earn commission, than giving mortgage advice.
Malcolm Coles, editor of Which?, says: “Bad mortgage advice can cost consumers thousands of pounds or, worse, their homes. Consumers deserve better. We'll be keeping an eye on the situation.”
Charlie Geller, who handles PR at Brettles Financial, warns that financial advisers should take heed of the research or run the risk of gaining themselves reputations akin to those that have come to be associated with estate agents or cowboy plumbers.
He says: “The majority of financial advisers conduct their business activities in a reputable and ethical fashion but it's important the industry recognises that incidents of inappropriate behaviour don't only affect the individual adviser, but the industry as a whole.”