Simon Read: Why paying for advice is a good idea

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The Independent Online

It's the first step in a trial which will be extended to 19 other branches in the next few weeks. And if the trial is a success it could go national in November.

It's obvious why HSBC is doing this. It may be Britain's sixth largest lender, but more than two thirds of borrowers choose to get a mortgage through independent mortgage advisers. They do this because advisers can offer borrowers the best deals available across the market, rather than just the best of a small range.

The bank has linked with John Charcol to offer the service but will charge customers £150 for the privilege. It's a clever move. If a customer chooses to just have an HSBC mortgage, the bank will make its usual profits from the sale. If a customer arranges a mortgage through the so-called "Mortgage Matcher" consultant – who are all John Charcol employees – the bank will benefit from the fee plus get a share of the commissions the adviser makes.

It's a win-win situation for the bank. But is it for borrowers? I'd say so. Anyone who waltzes into their bank or building society and accepts the mortgage deals offered is potentially missing out on many better deals. A fixed rate mortgage, for instance, at 0.5 per cent higher than another could end up costing thousands of pounds in extra interest.

Or it may be better to take a type of loan that your lender doesn't offer, such as an offset, tracker or discount. An independent adviser can help you choose from almost everything available on the market, while a member of staff at a bank will only have their four or five mortgages to choose from. Taking a bank deal could therefore be a costly mistake.

London mortgage adviser Peter O'Donovan of Bestinvest says HSBC's move is an admission from the bank that its range of products is lacking. "Hopefully HSBC's customers will see that seeking advice from advisers to compare the whole market is common sense, as the lowest rate is not always best advice," he says.

Which begs the question is it worth paying an extra £150 for the advice? If you could potentially save thousands then the £150 is clearly an investment. But then why not go direct to John Charcol or another mortgage broker and save the fee?

Because you will end up paying for the advice one way or another. If an adviser doesn't charge you a fee, it's because they're making money from commission. But if they are relying on the commission from lenders for their payment, then what's to stop them pushing you onto the lender that pays the most commission?

It's been an ongoing debate in the financial services industry for years. Advisers clearly need to be paid but many people seem unhappy about paying a fee, which means they're forced to rely on commission. If HSBC's move helps more people recognise the value of paying for independent advice, it will be a good thing.

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