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Banks guilty of hoodwinking customers – Star Letter 06/02/2015

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  • 06/02/2015
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Banks guilty of hoodwinking customers – Star Letter 06/02/2015
Each week Mortgage Solutions picks the most opinionated or thoughtful reader contributions from our article comments and letters to the editor.

Each week, we also round up the best comments, emails and letters to the site and pick one reader contribution as our Star Letter. This week’s award goes to:

Building society sector deinies it is struggling under regulatory burden

I can understand Robin Fieth, defending the building societies, by saying their growth is steady and blaming the banks for coming out with low rates and hitting more niche markets, however I don’t think that is the only reason that the banks have shown much greater growth.

Mr Fieth may not get the opportunity to speak directly to borrowers and find out what they are being told, but I do it almost every day and there are some shocking differences in the way I am hearing building societies are dealing with clients as opposed to high street banks.

Both banks and building societies still advertise to the public as to how easy it is for them to identify the best mortgage to meet their needs just by popping in to see them on the high street, so most of the public are not really aware of the changes and have years of history of just saying what they wanted and getting it.

Personally I think there should be a similar ban put on financial advertising as there is on cigarettes. The building societies seem to have a quaint honesty about them, unlike the banks and have accepted MMR as a requirement that must be followed with honesty. As a result, I have seen clients who made an appointment with a building society, waited until there was a date that a society adviser was available and then, after a good fact find, was told why that lender could not assist them.

They then realise this is more difficult than they thought, see an adviser and they can find a suitable mortgage from a lender whose criteria the clients do fit.

Banks, however, are now retailers, always looking to make the sale and then the add-on sale as well. They still have their targets regardless of MMR, they are just wrapped up in different words. From the conversations I have had with clients, banks see MMR as something that needed to be studied so that a work around could be found.

As a result, AIPs are being done in some banks, without sight of any client documentation, or even a partner, and these are being wrapped up in words suggesting a mortgage is now a formality. This ties the client, who now believes they have sorted out their mortgage, to them for six weeks or more. When the client is ultimately rejected, they leave with the impression that no one can give them a mortgage and they should come back another time.

The clients who do get mortgages have generally not considered other options as they have what they asked for and their idea that it is easy to arrange a mortgage is reinforced.

The style of mortgage discussion I have heard about from clients is full of implication and I strongly suggest that the FCA start mystery shopping banks to check the process they are actually using on the high street. Perhaps then another reason for them storming ahead of building societies on mortgage arrangements could be found and possibly, a more honest service across the board would result for the clients.

Banks V Building Societies

You can read more of this week’s best reader comments in our Star Letter Extra column HERE.

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