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First-time buyers should never be offered execution-only – Mojo Mortgages

  • 28/05/2019
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First-time buyers should never be offered execution-only – Mojo Mortgages
First-time buyers should never be offered an execution-only process to purchase a mortgage, according to Mojo Mortgages' co-founder and CEO Richard Hayes.


Speaking at the Building Societies Association annual conference, Hayes (pictured) noted the industry had to be “really careful” and said there were a lot of lenders “pushing execution-only really hard”.

Rameez Zafar, co-founder and CEO of Eligible, added that the Financial Conduct Authority (FCA) had “good intentions” but there were a lot of risks in its pro-execution-only move.


First-time buyers and execution-only

Mojo CEO Hayes explained that advice would continue to play a vital part in the mortgage journey, but not necessarily for every customer.

“Businesses would do well to wake up to the idea that we should be creating the right type of experience for the right type of customer,” he said.

And he emphasised that this needed to be done appropriately by selecting the right customers.

“We have got to be really careful. The really important thing about execution-only, is that first-time buyers should never be offered execution-only full stop,” he continued.

“But certainly from our understanding there’s a lot of lenders pushing execution-only really hard, pushing integration with the aggregators.

“We’ve seen Nationwide announce a partnership with Money Supermarket and we’ve got to be immensely careful about who gets access to an execution-only experience.”


Who is allowed execution-only?

Hayes noted that the broker firm was “exceptionally conscious” about who was allowed to access execution-only, even when it came to remortgage customers.

“What data can we use to understand if we should even be offering a remortgage customer an execution-only experience?” he said.

“Data and technology play a key part. Can we see a change in spending habits? Can we see a change in someone’s income?

“Can all those things mean we should actually be speaking to someone about their situation, before we go offering them a fixed rate of five, seven or even ten years.

“Technology plays a vital part and data will probably be the key to ascertaining whether somebody fundamentally should be offered that type of experience,” he added.


Good intentions

The consultation published by the FCA to encourage execution-only mortgage business has received much criticism from the market.

Also speaking on the panel debate, Eligible CEO and co-founder Rameez Zafar, explained that he thought the FCA had “good intentions” but that there were serious flaws.

“We were one of the first people to meet the FCA after their last paper and I think the intentions are good,” he said.

“The intentions are you should have more flexibility to offer the customer an experience that helps that customer understand their options that doesn’t necessarily step into advice.”

He added: “The problem is these are unsophisticated customers. Are we comfortable within five clicks of putting someone on a ten-year product without talking to anybody?

“That’s a lot of reputation risk you have to own before you can do that.

“So I think this will take time, and as the market is shifting towards longer products, having a little bit of process of manual intervention for something that makes you very comfortable is not a bad thing at all.”

This was echoed by FirstHomeCoach CEO and co-founder Ben Leonard who added: “When we were at one of the FCA’s sessions for fintechs talking about this, we were at pains to explain to them that what they should be looking at is customer outcomes, and not execution-only per se.”





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