The Consumers' Association has launched a fresh attack on financial advisers as its own research suggests only three out of 39 mortgage "gave acceptable advice".
A mystery shopping exercise conducted by the CA – and published today in the latest Which? Report suggests advisers are failing to inform consumers about the mortgage code and the various ways to repay a mortgage while others are accused of presenting misleading information.
Seven CA researchers posed as first time buyers and visited 39 banks, building societies and estate agents – including Abbey, Barclays, Bradford & Bingley, Connells, Halifax, HSBC, Lloyds TSB, Mann Countrywide, NatWest, Nationwide, Northern Rock, Sequence, Spicerhaart, Team and Your Move, and seven independent estate agents - between September 2003 and January 2004 to find out what advice is given on mortgages.
In particular, the CA says seven advisers failed to mention the mortgage code and 14 gave misleading information about it while 21 advisers failed to properly explain the ways to repay a mortgage and 23 didn't clarify the different deals available.
Its focus is also targeted at pointing out the high street banks’ advisers did not disclose their tied status and their ability to only recommend their own companies’ products.
At the same time, however, Malcolm Coles, editor of Which? says the seven “independent” advisers attached to estate agencies failed to tell consumers they were not independent in relation to protection business.
“While some so-called independent advisers made a big deal out of saying they could 'search the entire market' for mortgages, they were less vocal about being tied to one company for protection insurance,” says Coles.
"Some of the bad advice we received was down to inexperience and poor training, or advisers being more concerned about selling protection insurance that pays big commissions than giving mortgage advice. Regulation won't solve these problems, though it should mean advisers become more accountable.”IFAonline
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