Mortgage Advice Needs To Improve

The Financial Services Authority (FSA) has said that a significant number of mortgage lenders are not providing appropriate advice to their customers.

A survey carried out using questionnaires, mystery shoppers and formal visits has found that in many cases staff training and record keeping is inadequate. In addition, customers are not always assessed properly to ensure that the mortgage is suitable for their circumstances and will meet their needs. In fact only one third of companies could prove that their customers had been given appropriate advice. The study included 252 banks, building societies and financial advisers.

The FSA has warned that if proper procedures are not in place then there is a greater risk that customers will be treated unfairly. They are more likely to be sold inappropriate mortgage products which they could find difficult or impossible to repay.

Although there were some examples of good practice at all levels, and in companies of all types, the FSA has highlighted widespread poor service. Banks, building societies and large financial advisers usually had correct procedures in place but staff did not always follow them. However, three quarters of smaller firms did not have appropriate procedures set out.

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