Mortgage advice ‘leaves a lot to be desired’
Watchdog the Financial Services Authority (FSA) has said that firms selling mortgages have to improve the quality of the advice they give to homebuyers, most of whom are making the biggest saving and investment decision of their lives by purchasing property.
The FSA’s latest survey of the mortgage arena, covering 252 firms, found that only a third of mortgage advisory firms surveyed could prove they gave customers “suitable advice”.
Failings included inadequate assessments of customers’ circumstances, poor staff training and poor record keeping, all of which were not conduicive to helping borrowers make a sound saving and investment property-buying decision.
Clive Briault of the FSA said: “We found significant failings in the advice-giving processes in a number of mortgage firms. It is essential that firms have robust processes in place, so they treat their customers fairly and provide suitable investment advice.”
The FSA was particularly concerned that some consumers were being sold mortgages without a proper assessment of how they would be repaid.
For example, the FSA already knew that 15% of borrowers took out interest-only mortgages with weak or no saving and investment repayment plans in place to pay off the capital amount at the end of the term.