Mortgage advisers 'fail' consumers

Updated 11.04 Wed Jul 23 2008

Keywords: consumers, advisers, Mortgage

Fewer than one in ten mortgage brokers are providing acceptable advice to consumers.

The consumer group Which? Money said four out of 50 advisers based at banks, estate agents and individual firms visited by its researchers during a mystery shopping exercise provided adequate advice.

The group said 41 intermediaries failed to provide the researchers with at least one piece of key information, while 35 failed to properly check whether the individual could afford to repay their mortgage

Instead they seemed more concerned with selling insurance products, on which they earn commission, with two-thirds trying to sell some cover, despite the fact that it was often unsuitable.

Banks were particularly likely to try to sell insurance, with one adviser concentrating more on selling the insurance than on advising about the mortgage, while another gave quotes for insurance that totalled more than £100 a month, despite the researcher saying they already had some sickness cover through their employer and they were on a tight budget.

The researchers, who posed as first-time buyers who knew nothing about mortgages, also found that many advisers took a 'one size fits all' approach, without bothering to examine their personal needs in detail.

The group said no type of adviser gave significantly better advice than others, although three of the four that passed the test were independent, while the fourth worked for Alliance & Leicester.