Tackling the answer in this week’s Market Watch are:
Ray Boulger, senior technical manager at John Charcol
Robert Sinclair, director of AMI
Alan Lakey, principal at Highclere Financial Services
Ray Boulger, senior technical manager of John Charcol
By definition anyone, lender or a broker, selling a mortgage on an information-only basis must be an “order taker” as anything else would tip them into the “advised” category.
Likewise, anyone selling a mortgage on an advised basis can’t do so compliantly, or ethically, if they are acting as an “order taker.” This is essentially what differentiates the sale of a mortgage on an advised or information-only basis.
Most brokers take a pride in providing their clients with good advice and many will relish the satisfaction that comes from arranging a mortgage for a client with challenging circumstances, especially if that client has already tried unsuccessfully to arrange a mortgage direct.
Some clients have no idea what sort of mortgage they want and little or no idea of what is available. Others have what, in their mind, is a clear idea of the type of mortgage they want, e.g. fixed or variable, and think they just need advice on what is the best deal.
However, very few clients will be aware of some of the niche options, even things which to a good broker are very basic, like whether an offset mortgage is appropriate.
Some clients select the type of deal they want purely by reference to the interest rate and give little thought to the myriad of other factors that need to be taken into account before choosing a mortgage.
The broker will be aware of relevant factors which in many cases the client won’t have even thought about. This makes it essential before making a recommendation to challenge, perhaps only in the broker’s mind if the conclusion is that the client’s choice is the right one, what the client thinks they want before making a recommendation.
Robert Sinclair, director of AMI
The last three years has seen a vast shake-out in our industry.
Most of the heads of firms I meet talk about how the industry has changed and the work they have done in their businesses.
They all talk about the move away from order taking, towards better fact-finding and better discussions about customer wants and needs, leading to more options being considered and instigating more discussions about insurance and protection.
One of the problems we have is that many of the large institutions that are the recruiters of new talent, such as our banks, tend to be based around a narrow product set and focussed on selling as much product as possible.
This is not a good training ground for what consumers really want. Consumers value advice and choice.
Whilst some forward thinking mortgage firms have established robust training programmes aimed at new entrants, many direct their efforts at recruiting experienced sellers.
What we need are professionals, who have good knowledge, understanding and empathy, capable of delivering high quality advice on debt, mortgages and protection.
In any industry, we will still have those who are less strong than others.
However, I genuinely believe that those who have survived the trauma of the recent times are those who genuinely work with their customers to deliver what they want and need. This does include debating the options.
If the customer says lowest price, that is the basis on which the advice must be given, provided this follows decent debate on the options.
On many things, I agree with Ray, but on this one I am struggling.
Alan Lakey, principal at Highclere Financial Services
Surely consumers approach advisers for advice. It may be that they do not always articulate this but, nonetheless, it must be the starting point for the initial conversation.
A good rule is to ask, “what would I do in his/her situation?”
Whether fixed or tracker, the easy route, as with protection insurance, is to play the ‘cheapest’ card.However, cheapest is rarely the best as proven by consumers meagre appetite for Kias and Daewoos.
Let’s face it, most consumers do not know what they want.
Partly, this is due to their inability to compare competing deals, partly because they are unaware of the varying lending criteria and also because they simply do not know what their options are.
Many consumers will scan Moneyfacts, Moneysupermarket.com and other sites and use the scant information as a determinant. But I have found that this creates even more confusion.
Looking at Moneysupermarket.com I notice that when asked for a selection of first-time buyer products, the first page shown is for remortgages.
Often a consumer will have an idea that he or she wants a tracker or maybe a two-year fixed rate because it offers what appears to be the cheapest option.
As Ray Boulger highlighted, this can prove a false economy. Not only will rates be higher when the two-year fixed term expires but the borrower will likely face another application fee negating much of the saving differential between a two-year and a longer-term fixed rate.
A good broker will establish current and future affordability. With inappropriate options removed, the conversation can then turn to the minutiae.
