This shone a light on the role of brokers at a time when consumers may be forgoing professional advice in favour of information readily available at their fingertips – regardless of how detailed or accurate.
So this week Mortgage Solutions is asking brokers: Are price comparison sites too simplistic? How do they highlight the importance of advisers?
The Experian report was an eye opener but would not be a surprise to intermediaries who understand there are a lot more nuances. It is also a strong reflection on why any focus on price alone is incorrect and will not lead to the best outcomes.
There are over 15,500 residential and buy-to-let mortgage products currently available in the UK, according to Twenty7Tec. This number is increasing every year, highlighting the vast number of options out there. This is a minefield to navigate for anyone looking without help.
Combine all those options with infinitely varied personal and income circumstances, the variety of property types and how they can impact a buyer’s options – you can see how product alone selection is far too simplistic.
There is also the added element that with the more complex client scenarios, a manual underwriting assessment is required.
It is not only circumstances that mean advice is key, but also the myriad of options available. All clients should seek advice on something as important and complex as a mortgage, which a comparison site cannot offer.
For clients who worry after rejections, we can see from the eligibility stats that if they have applied based on price there was a good chance they would be rejected, and there is still a good chance there will be options out there on the market for them. Therefore, a comparison site should be used just as a rough guide, but advice should be taken from an intermediary before any lender is approached.
In my view, comparison websites are informative tools to give clients an indication of rates and eligibility of mortgages, essentially a simplistic overview of what is available to a client. These tools can be very useful for clients that are not quite ready to fully commit to the mortgage process or are in early stages of a purchase or remortgage and just wanting an indication.
We live in a world where consumers want answers at their fingertips, comparison websites fit that purpose, however as a business we have found that at the point clients are ready to commit most ‘want help’. For a comparison website to provide an ‘advised’ recommendation of the suitability of that mortgage is questionable, therefore does that constitute advice?
The comparison website is asking a client to input all the correct information and then confirming the lowest rate product is the best for them without any interaction from a qualified adviser.
A comparison website is also relying on a consumer to input the correct income and commitments as the lender would see them and for complex incomes or multi-income streams or multiple commitments both credit and non-credit, these are where the variables happen and I assume this is how a third of cases result in a decline, simply a client not understanding what they need to provide or what should or should not be taken into account.
In summary, comparison websites are great for initial checks and eligibility but having a qualified adviser to help you through the application is priceless.
Comparison sites have been part of the market for some time now and given the strength of comparison sites in many sectors of personal finance such as insurance and energy, it’s highly likely that mortgage customers will have looked at comparison sites before talking to an adviser.
Comparison sites have never claimed to be giving users advice on personal circumstances. Although it has become easier for borrowers to customise and filter the best buy listings, there is still much more to securing the right deal.
Advisers can ask questions around lifestyle to help the customer determine the right approach for them, before factoring in their individual circumstances to make sure they can pinpoint the right deal and criteria.
Comparison sites recognise that and we work in partnership with several to provide an advice option to customers that do not want to, or are not confident enough, to apply for a deal without greater reassurance.
The figures from Experian highlight the fact that qualifying for a deal and meeting the quirks of lender criteria is just as important to the success of an application as finding the cheapest rate. Of course, sites are and will continue to develop eligibility tools to improve that success rate.
It still won’t constitute advice and we know that although consumers like and expect to be able to interact online, they will often still need the assurance of advice. Brokers need to ensure that customers understand the added value that can bring.