Housebuyers calling at estate agents such as Halifax Property Services or Black Horse have the chance to see a mortgage adviser there and then. But, as sales practice stands, they have little chance of telling whether the adviser they are talking to is, in effect, a salesman for the parent lender, or offering genuine independent advice.
In the case of Halifax Property Services (HPS), as much as 80 per cent of the loans business done by its advisers goes to Halifax itself. Other lenders will get a look-in only if the customer fails to meet Halifax's credit score, or if switching their mortgage would mean incurring redemption penalties.
Each Halifax Property Services branch is given an annual target for the percentage of loans business its mortgage adviser is expected to deliver to the parent bank.
At the other end of the scale is Skipton Building Society, where advisers in its Connell estate agents chain send less than 10 per cent of business to Skipton.
Genuine independent advisers have long complained that borrowers are left believing they have been given independent advice. Ian Darby of John Charcol says: "It gets very confusing for Joe Public. I've heard tied agents saying they're independent mortgage brokers.
"With the code of practice, you will have to define whether you are operating from a panel of lenders, whether you're operating as the agent of one lender only, or whether you're operating from the whole open market. That's the definition that's going to give lender-owned business a challenge."
Hilary McVitty of Woolwich says the group's own Woolwich Property Services operates a similar system to HPS. "Their initial interview is in terms of Woolwich products only," she says. "Only if they didn't qualify for a Woolwich loan would they move on to something else."
When the new code takes effect on 30 April, all mortgage advisers will be obliged to disclose their true status. Borrowers will be able to phone a central register to see if their own adviser is listed there.
In the case of HPS this means customers will be told: "Our mortgage recommendations are based upon looking at Halifax products first and then, where our assessment of our needs indicate, or you specifically request, we will advise you on mortgage products from a selection of other lenders."
This information is delivered both verbally, as soon as the mortgage consultation begins, and later in writing.
Alan Snowball of HPS points out that all HPS branches - and the staff inside - are clearly badged with the parent group's name. This, he argues, means people should know what to expect when they come in the door.
But Skipton's David Charlton is not so sure. He says: "Whether the real choice offered is made clear enough at the moment is a debatable point. I think anyone going for a mortgage really has to ask what relationship that particular estate agency has with the lender."
The code will also oblige advisers to disclose whether the fee they will receive for selling whichever loan they recommend is more or less than pounds 250. If more than pounds 250, the exact amount must be disclosed. This measure is intended to give consumers a way of judging whether the advice they are offered has been influenced by the payment the adviser would receive for the sale.
Mortgage lenders have been working to the code since July last year. Lenders representing 98 per cent of the UK mortgage market are pledged to refuse business from advisers who refuse to join its register.
The National Consumer Council has welcomed the code in principle, but stresses that strict monitoring and compliance will also be needed. Ruth Evans, an NCC director, says: "We want to see mystery shopping and compliance checks become part of the process. Good monitoring and enforcement are the keys to effective consumer protection under a voluntary code like this, but that doesn't come cheap."
For prospective borrowers, the new mortgage code is only part of the answer to them being able to find the right mortgage. A mortgage which suits you might not be available through that lender's estate agency chain. Before an offer is considered on a property, it pays to research the market fully, looking at best buy tables published in most newspapers, including The Independent. When you have found the right loan, a mortgage offer "in principle" not only avoids you being forced to seek a loan through that agent, it may also help secure the property you want.
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