Money: Best-buy tables are not always black and white

Every weekend, hundreds of thousands of newspaper readers scour through personal finance pages to check out the best deals on mortgages and savings accounts. But, as Rachel Fixsen discovers, what they read may not always be the whole truth.
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If you're looking for a good mortgage or savings deal, turning to a best-buy table in the personal finance pages can be a good starting point. They save you from having to wade through the sea of financial products on the market. Presented in black and white, these charts often make your choices seem clear cut.

And financial institutions are more than happy to see their products appear in the league tables. At the very least, inclusion brings good publicity and attracts business. For some, it means far more.

In its battle to retain mutual status earlier this year, the Nationwide Building Society cited best-buy tables to underscore its case. The building society said that during May, its products were mentioned more than 100 times in newspaper best-buy tables. "This was one of the arguments to show the true benefits of mutuality," a spokesman says.

But can you really rely on the information the tables give? Discrepancies between the various published tables have prompted some doubts.

Mortgage provider FirstMortgage carries out its own weekly analysis of best-buy mortgage deals published in national newspapers. "The information that appears in some of the tables is not unbiased," claims the FirstMortgage chief executive, Nicholas Deutsch.

In last weekend's tables, for example, the best three-year fixed-rate mortgage is variously named as the Lambeth Building Society at 6.05 per cent, FirstMortgage at 6.15 per cent and the Leeds & Holbeck Building Society at 6.24 per cent.

Independent financial information providers, such as MoneyFacts, which provides the Independent and Independent on Sunday's lists, and Blay's Guides, are the sources for many of the tables. Their impartiality appears to be unquestioned.

But some see problems arising in cases where a mortgage broker puts a table together. After all, brokers arguably have a vested interest in seeing certain mortgage products included in league tables and others left out.

Vicki Burn, editor of MoneyFacts, says: "Some put their own products in, which is rather naughty."

In some cases, brokers compiling the tables have actually asked lenders they include in the list to pay them a fee, according to Mr Deutsch. "We have been approached and asked for procurement fees in exchange for inclusion into a best-buy table which was part of a broker-sponsored feature on mortgages," he says.

But some mortgage brokers who compile best-buy information insist their tables are impartial, and deny that they ever ask for fees from lenders they include.

Chase de Vere Mortgage Management, which provides a table of best-buy mortgage deals for the Sunday Times, puts discrepancies down to the fact that choosing what to include is, to a certain extent, subjective. For instance, in a table for a national paper, Chase de Vere would never include a product that was not generally available, says director David Duncan.

Though Chase de Vere and London & Country Mortgages, another best-buy table provider, don't lend to home-buyers themselves, some mortgages are exclusively available through them. Both brokers say such products are always deliberately left out of any league tables they compile. London & Country compiles tables for the Evening Standard and Daily Telegraph.

"Different papers want different things," says London & Country manager Patrick Bunton. Which deals are included depends on what the table is asked to do, he says.

As an example, he says the Leeds & Holbeck's three-year fixed-rate mortgage appears to offer a good deal at 6.24 per cent. But since it has a five- year redemption charge, for certain borrowers a mortgage from the National Counties Building Society at 6.99 per cent for three years could end up being cheaper, because it has no early redemption penalties.

With more than 4,000 mortgage schemes on the market in the UK, the variation between conditions attached to the loans can be huge. Premiums for mortgage indemnity guarantees, the one-off insurance which is often compulsory when you take out a mortgage, can differ greatly, as can other types of fees and charges, not to mention cashbacks and other incentives.

"There are so many different things to take into consideration that often a straight rate analysis throws up totally misleading information," Mr Bunton says.

So though best-buy tables can provide an overview, in many cases they are a blunt instrument. Charts showing the best rates for savings accounts and bonds often give no information about the other side of any investment equation - risk. If you are making a choice between government-backed bonds and deposits at large established building societies, the risk is probably negligible.

But where the tables list past performance of collective equity investments such as unit trusts or investment trusts, it is much more important to take risk into account. A fund brimming with Hong Kong shares may have performed splendidly over the past few years but, as recent events on the ex-colony's stock exchange have demonstrated, the risk is high.

Stuart Cliffe of the National Association of Banking Customers, an independent watchdog, says your choice of financial product all comes down to your individual situation.

"We always suggest that you go to an independent financial adviser [IFA]," Mr Cliffe says. IFAs are required by law to find out all about a person's financial situation before they give advice.

The other alternative is to compare the best-buy tables from several newspapers and contact each of the top two or three to find out why they have been included and whether there are any catches to their products. It may mean more homework. But it has to be better than simply making a decision based on one set of figures that may not be totally accurate.

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