Mortgage brokers have come under attack over poor advice standards after an undercover Which? investigation found just four out of 50 advisers gave acceptable levels of guidance.
Over 80 per cent of those contacted failed to provide key information about the lending process, as required by the financial regulator. Some 35 advisers failed to make a proper check to ensure the individual could afford to repay the mortgage, the investigation revealed, which "mystery shopped" advisers at banks, building societies, estate agents and independent mortgage advisory companies.
Martyn Hocking, editor of Which? Money, said: "Listening to people's needs and giving tailored advice should be the bread and butter of a mortgage adviser's job, but too many of the advisers that we visited took a "one size fits all" approach or seemed as concerned with selling an insurance policy on the side. With mortgage costs soaring and the spectre of negative equity returning to the property market, it's important people get help to find the right deal from the 3,000 on offer," he added.
Chris Cummings, director general of the Association of Mortgage Intermediaries, said the findings highlighted the need for consumers to seek independent advice. "During difficult periods in the market, consumers need advice more than ever," he said. "They must be made aware what they are receiving. Independent mortgage advisers provide advice wholly focused on the individual's needs. In contrast, banks and building societies may offer only generic information."
Consumers have turned in increasing numbers to independent advisers, Mr Cummings said, adding: "The number of first time buyers using an intermediary increased to 82.5 per cent in the first quarter of 2008, 10 per cent higher than in quarter one 2007."
The report comes amid expectations of a huge shake-up in the way financial advice is provided and paid for – in an attempt to reduce consumer confusion. Currently a financial adviser can advise on the whole market, a selection of product providers or work for one company. But proposals from the Financial Services Authority's Retail Distribution Review include a uniform benchmark for professional qualifications among advisers.
All advisers would be independent of product providers, able to recommend products from across the market. In-house sales services at banks, building societies and other providers would be strictly non-advised.Reuse content