Mortgage advisers are 'failing customers'

Mortgage advisers are 'failing customers'

In an undercover survey of 50 advisers, Which? said that 41 had failed to provide one or more pieces of vital information required by the City watchdog the Financial Services Authority (FSA), while 35 failed to check that customers could afford to repay the mortgage.

In total, 90% of firms were found to be letting customers down.

The advisers included banks, estate agents and independent mortgage advisers in England and Scotland. Researchers posed as first-time buyers looking for advice and a mortgage recommendation.

Martyn Hocking, editor of Which? Money, said: "Listening to people's needs and giving tailored advice should be the bread and butter of a mortgage adviser's job, but too many of the advisers that we visited took a 'one size fits all' approach or seemed as concerned with selling an insurance policy on the side."

Which? said one adviser had dismissed the idea that interest rates may fall, which they did a few weeks later. Two-thirds tried to sell insurance products, some of which were for an unsuitable product, while another used Kylie Minogue's breast cancer diagnosis in an attempt to sell critical illness cover.

One adviser also dismissed the key facts document giving details on a mortgage, and which they are required by the FSA to show customers, saying: "A lot of the stuff in there is just blah, blah,.....continued below

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"With mortgage costs soaring and the spectre of negative equity returning to the property market, it's important that people get help to find the right deal," said Hocking.

"There are still more than 3,000 mortgage deals out there, and the difference in cost can be thousands of pounds a year, so it's vital people do their homework and choose their adviser with care."

Chris Cummings, director general of the Association of Mortgage Intermediaries, said consumers needed to understand the difference between independent advisers and those who sell products, and this should have been made clear in the report.

"Consumers must be made aware what they are receiving," he said. "Independent mortgage advisers provide advice that is wholly focused on the individual consumer's needs. In contrast, banks and building societies may offer only generic information."