Your Money: Victories for consumers

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The Independent Online
THE consumer lobby has had quite a good week. Several normally murky corners had beams of cold light focused on them. There were skirmishes over the quality of mortgage advice, plans to curb unsuitable investments being foisted on the public, and action over the stitch-up between mortgage lenders and surveyors.

The Office of Fair Trading decided that the Monopolies and Mergers Commission should take a closer look at the way would-be homeowners are made to pay for valuations for the benefit of lenders, who want to check that their loans are more than covered by the value of the property.

Surveyors are getting cross about the fact that institutions usually have a panel of valuers. Only those valuations done either by one of the valuers on their own staff or someone 'on the panel' will be acceptable. The outsiders are left out in the cold.

But even some of those on the panels are getting edgy as mortgage business has dried up and they see the bulk of the work going to keep the staff valuers busy, so there is little left over for the freelancers.

More than 80 per cent of borrowers make do with just a valuation and do not bother to investigate the property further. This is probably not due to indifference but a desire to save money. A valuation costs around pounds 100, while a basic report for home buyers - a long way short of a full structural survey - costs around twice as much.

Buyers can choose to extend the scope of the valuation and pay extra. But if they start out with their own surveyor, who turns out not to be acceptable to the lender, they have to pay all over again for a valuation.

Deals struck between valuers and mortgage lenders hinge on the fact that valuers are usually estate agents wearing another hat. So those agents that put mortgage business the way of a lender get valuation work; and those valuers in turn direct home buyers towards a mortgage source that will also supply them with work.

But it does not have to be like that. Barclays Bank, for instance, says it has never operated a panel system and that any member of the professional bodies chosen by a buyer is acceptable. That, rightly, puts the homeowner in the driving seat.

The excuse that lenders need to keep a tight rein on valuations to prevent fraud is starting to look a little weak.

The Office of Fair Trading is right to suspect that when he who pays the piper does not call the tune, the winds of open competition are not going to keep standards up and costs down.

The Which? report on the quality of mortgage advice made predictably depressing reading.

It discovered that endowment mortgages bringing handsome commission payments to those who sell them were pushed to the exclusion of simple, and often more suitable, repayment mortgages.

Beyond this, the information offered by a selection of banks, building societies and advisers was so poor, it was often downright wrong.

A report instigated by the Securities and Investments Board, the chief industry regulator, looks like forcing a little more openness on those who sell investments.

On a brighter note, Jennifer Hirschkorn from north London is celebrating a double victory. Faced with buildings and contents insurance from her lender that was soaring from just over pounds 400 to more than pounds 700 apiece, she spent an hour ringing round for quotes and saved pounds 500.

Her complaints to the Bradford & Bingley Building Society about the high rates - and the pounds 20 fee for checking the buildings insurance - culminated in Ms Hirschkorn presenting the society with a bill for pounds 33 for her hour's work.

She believes it has agreed to call it quits.

DirectLine, which pioneered phone insurance, was the star turn last week when the Royal Bank of Scotland revealed its half-year profits.

It plans to build on its solid base in motor insurance to tee up the home insurance market and extend into personal loans and possibly other personal financial services.

It has earned a reputation for offering pretty competitive rates and delivering a reasonable service. But being a tightly run business, it is after profitable business. This means that those who perhaps do not look like standard middle-aged, middle- England, middle-of-the-road customers either get a heavily loaded premium or a refusal.

That, I suppose, is good business. But it leaves some feeling short-changed.

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