‘People using execution-only will find their journey a lot more challenging than they expected’ – poll result

‘People using execution-only will find their journey a lot more challenging than they expected’ – poll result


However, the FCA contends that an execution-only process is no riskier than an advised one and that UK borrowers could save a £100m pounds as a result.

So, Mortgage Solutions’ latest poll asked brokers whether they are concerned by the potential resurrection of execution-only sales as a real force in the mortgage market.

Around 36 per cent of brokers said they are very concerned, with 38 per cent saying they are moderately worried because it could cause problems if not handled well.

Nine per cent of brokers said that they are a little concerned because they cannot see too much risk from it.

Around 17 per cent said that it will only be limited take-up from knowledgeable people, so they are not worried at all.

Mark Stallard, managing director at House and Holiday Home Mortgages, said: “Brokers are concerned because following the Mortgage Market Review, we were told that customers needed help and advice and intensive checks would need to be made for affordability purposes and detailed advice would need to be offered in most cases. I don’t understand what has changed?

“My personal experience is that lots people from all walks of life want brokers to help them. Either because they have not got the time, inclination or understanding to do it themselves.”

Stallard said that a lot of people using execution-only will find their journey a lot more challenging than they expected.

He added: “Day after day a broker starts with what looks like a simple case only to find all sorts of pitfalls and traps in the detail.

“We have seen a lot of very savvy first time buyers come to us for help even though they could have done it themselves. Like most major transactions in life, help is always welcome from trusted sources.

“Brokers are concerned naturally for their livelihoods and for the way it will pan out for good customers if they are enticed away. We will just have to keep banging that drum to our client banks as to what value we add.”


Small part of the market

James Chisnall, director at City Finance Brokers, said that as professional advisers, their role is to discuss in detail their clients circumstances and future plans with a view to making a formal recommendation based on that client’s specific needs.

He said: “The recent FCA consultation paper proposed making the process clearer for clients who would not be taking advice. It also aimed to reduce the amount of detail on regulated firms’ policies in this area.

“Execution-only sales have always represented a very small part of the intermediary market. An example would be a high net worth client who is fluent and sophisticated with the financial market and knows exactly what they want – they simply need a broker to process the case for them.

“Frankly, this happens so rarely that I don’t see execution-only sales ever becoming a competitor to good, quality advice, particularly if the advisory process has been followed correctly.”


Some clients fully equipped to make decisions

Dominik Lipnicki, director of Your Mortgage Decisions, said: “There has always been space for execution-only sales within the market. Some clients know exactly what they want, they are fully equipped to make decisions by themselves, while the majority might prefer an advice process with a wide range of options.

“Everyone is different and as brokers we shouldn’t be worried but we should move with the times. There is no point in fighting changes because they will happen anyway.”

Chris Sykes, mortgage consultant at Private Finance, said: “From our perspective, the resurrection of execution-only mortgages is a troubling development in the mortgage market. Mortgage advisers are qualified and regulated for a reason, and that reason is to bridge the information gap that exists between borrowers and lenders. Lenders sell products, whereas advisers sell solutions.

“We frequently find that the products our clients have in mind when they first approach us are far from optimal; the advice we provide can therefore prove to be extremely valuable, averting our clients from a course of action that would have left them burdened with suboptimal financial entanglements.

“None of this is a great surprise: the mortgage market is a confusing place; consumers cannot be expected to navigate this terrain without the support and advice of an experienced consultant.

“The worry we have, therefore, is that borrowers will approach lenders without having received advice from a qualified consultant, and that they will take out mortgage products that do not serve their best interests.”


Market focused on underlining reasons for using advisers

David Hollingworth, associate director at L&C Mortgages, said: “The results of the poll show that brokers are taking the potential for a return to execution-only very seriously indeed.

“That’s good news as it suggests that the market will be very focused on continuing to underline all the good reasons for using an adviser. Many borrowers have already switched onto the benefits of advice, particularly as they have faced a market where the right criteria choice is as important as the interest rate.

“Product transfers could be seen as an area where borrowers might be tempted to use execution-only options with their lender but that still doesn’t assure them that they have the best rate in the market. Brokers can factor transfers in alongside a broader shopping around of the open market, so need to accentuate that they can offer the best range of options to their customers.”

‘Real value is delivering a mortgage offer on time to enable completion to take place’ – poll result

‘Real value is delivering a mortgage offer on time to enable completion to take place’ – poll result


However, over half of brokers feel confident that they have always worked hard and do not need to change their strategy.

Mortgage Solutions’ latest poll asked brokers whether they are working harder to prove their value to the clients.

Around 36 per cent replied positively, while 55 per cent replied negatively.

Around nine per cent of brokers were unsure.

Robert Winfield, managing director of Chartwell Funding Limited, said that the real demonstration of value is delivering a mortgage offer to a client in a timely manner to enable completion to take place.

He added that brokers are not working harder to demonstrate value, the job has become more laborious.

“I would not say we are working harder to demonstrate our value per se, however we are working harder to obtain results for our clients when having to submit mortgage applications numerous times following bizarre underwriting decisions or clients withholding information.

“In a typical scenario we would discuss the mortgage process with a client, explain why we charge a modest fee for our services and explain what we will do for it. This would be agreed upfront and we would apply for the best value product for our client. We add value to the transaction by giving advice based on the whole of the market, providing easy access to our mortgage brokers and having an efficient administration team backing them up. We work with all parties throughout the whole transaction and add extra value by ensuring a swift/smooth completion.

“As mentioned earlier, things can go wrong and we may need to revisit our advice. Normally a re-submission would be seen as a failure but we see it as an opportunity to reiterate the importance of using a whole of market broker. We always deliver bad news promptly and have a plan B ready for use in the conversation. We would reapply for the loan the same day and the admin team would prioritise the application to ensure it gets assessed promptly.”


Brokers need to show care to retain customers

Mark Stallard, managing director of House and Holiday Home Mortgages, said that brokers must show that they really care about each and every customer’s circumstances, standing more chance of retaining them in the future, despite the lures of Alexa, Siri and Robots.

He added: “If I am a customer and I want a mortgage or remortgage and at completion stage if the transaction has gone smoothly in terms of time and effort on my part and the speed and effort and success in terms of the brokers involvement and I am happy with the whole outcome including what I was charged, then I  will think I have added value.

“In simple terms, we brokers must prove our worth to our customers and never leave them thinking ‘I should have done that myself on google’. We always know  we should add value in a complex specialist transaction.  We demonstrate value by being straightforward, honest, timely and having that product knowledge most customers don’t have.

Brokers need to work hard to maintain customer engagement

David Hollingworth, associate director of communications at L&C Mortgages, said: “Equally positive though is the proportion that are consciously putting more effort into making sure their customers understand the value of the advice that they’ve received.

“There is certainly no room for complacency though as savvy customers will look for the right solution that appeals to them at the time, whether that comes from an adviser, comparison site or lender. Brokers cannot rely on blind loyalty and will need to work hard to maintain customer engagement at all times rather than expect to revisit every two, three or five years.

“An initially surprising finding is that almost 1 in 10 are not sure whether they are working harder to demonstrate their value.  There’s perhaps a positive to take from that stat as at least they are questioning whether they have done enough and that awareness should only help drive improvements in the longer run.”


Value is in designing a plan

Dominik Lipnicki said: “It is imperative that as mortgage advisers we go that extra mile to deliver a superior service. We must always be in search of excellence, this should never end as there is always room for improvement and those that stop improving will be taken over by others.

“In today’s race to the bottom marketplace, unless you want to offer a budget service, you must show value for money. We all know that client acquisition is key to success, hence once we have a client, we must do all that we can to ensure that it is a client for life and for that our service must be so good that it is memorable. Clients more than ever appreciate a tailor made, personal service which is so often missing in our industry.

“Value is not just giving the client the cheapest rate, anyone can do that. Real value is in designing a plan, meaning that the decisions that your clients have made today will still be the right ones in the future. Quality over quantity is key. Going that extra mile and always trying to improve will yield personal recommendations as well as repeat clients.”