Last week Skipton Building Society announced it was rebranding its joint borrower sole proprietor (JBSP) mortgages as ‘income boosters’, arguing that the existing term is difficult for borrowers to understand.
Brokers welcomed the move to ditch jargon from the mortgage journey, but emphasised that clearing up misconceptions is core to the role of the adviser. There were also some who called for the industry as a whole to cut out the ‘gibberish’ that leaves borrowers befuddled.
Shining a light
Gary Bush, financial adviser at MortgageShop.com, welcomed the move by Skipton, noting that the JBSP handle is “complicated”. However, he added that for such a “tricky to explain type of mortgage account option”, there isn’t really a way to make it more client friendly.
Anil Mistry, director of RNR Mortgage Solutions, agreed that JBSP was a “cryptic” name for a mortgage product, which “might as well be an alien language” for most borrowers. He thought that income booster was an improvement, since it “actually makes sense to regular folks”.
Sebastian Riemann, director of Virtus Private Finance, said that plenty of mortgage terminology “is confusing at best”, and noted that individual lender branding can actually add to this confusion.
He suggested that Skipton’s move did not help, since another lender has a product called ‘Boost LTI’, and while to most people they sound similar, in reality they are very different.
“Why not simply call it a guarantor mortgage? Most older borrowers and brokers would find this much easier to understand and explain,” he continued.
Brokers hold the key
Changing the terminology with the consumer in mind is not the solution, argued Riemann, since the broker is there to explain everything in plain terms and ensure the client understands the product and options available.
He added: “The key is therefore in the training and understanding of the advisers, given that most business is still transacted via intermediaries in the current climate.”
Bush added: “Financial services is littered with jargon and abbreviations and that is more reason why the UK general public needs a decent impartial financial advice firm to guide them through all the clutter and talk to them in plain language for their important transactions.”
Start all over
Rhys Schofield, brand director at Peak Mortgages and Protection, said he would “tear down the whole lot” and start the mortgage market all over in more customer-friendly language.
He gave the example of headline rates being advertised, which don’t include the cost in fees.
“Some sort of ‘total to pay’ should be front and centre, including fees. In fact, given that that is the most important feature of a mortgage it should be the top item on any illustration, and in bold text,” he continued.
What is an ESIS?
Jamie Thompson, mortgage broker at Jamie Thompson Mortgages, suggested that ESIS is the most unhelpful jargon within the industry, since even when a broker explained that it stands for European Standardised Information Sheet, clients are still none the wiser.
He continued: “It’s not some obscure thing that only finance professionals will come across. It is in fact the illustration, or for want of an even more relevant term, quote of the mortgage. It as a document that describes all the key parts of the mortgage, from the term, amount, interest rate, monthly payment.
“Apparently ESIS was the best thing to call this for clients. Come on. Do better.”
No need to reinvent the wheel
Riemann emphasised that the market would be in a better place if lenders focused on providing the best products possible, rather than focusing on product innovation for its own sake.
He explained: “Rather than trying to dress up the same options it would be far better if lenders looked at some of the traditional products including capped trackers, stepped fixed rates and guarantor mortgages and leave the marketing and advising to the brokers.”
An industry crackdown on ‘gibberish’
Mistry argued that the mortgage industry generally is “drowning in jargon”, but was another to point to the importance of brokers in breaking it down into plain English so that clients truly understand.
The FCA has spent a pretty penny on Consumer Duty, but part of that should have included a crackdown on industry gibberish – not just in mortgages but also in protection products.
According to Darryl Dhoffer, mortgage expert at The Mortgage Expert, it’s down to both lenders and the industry as a whole to clear up the confusing terms used in the mortgage market so that things are easier to understand for borrowers.
He argued that lenders can do this by utilising plain language in their marketing materials and loan documents, as well as providing borrowers with educational resources to help them understand the mortgage process.
“The industry as a whole can work together to develop and implement standards for mortgage jargon. This would make it easier for borrowers to compare different mortgage products and understand the terms of their loans,” he added.
