Intermediaries welcome broker comparison tool but question its practicality
Intermediaries have welcomed the creation of a broker comparison tool for consumers but questioned how it can be introduced.
It will be developed and hosted by the Single Financial Guidance Body. In July 2018 an FCA working group was set up to support the development, consisting of intermediary and lender trade bodies and consumer organisations.
The group said the tool should include adviser qualifications, information on fees, the number of lenders intermediaries place business with, their areas of expertise and shouldn’t favour larger brokerages over smaller ones.
Jonathan Burridge, sales manager for The Mortgage Broker, said: “The principle of an independent directory for intermediaries seems quite logical but how will it work? Looking at the Retirement Adviser Directory there is not much scope currently to filter and there is expectation that the consumer knows what to look for in their search criteria.
“Dig a little deeper on the Money Advice Service website and there is no guidance at all on finding a mortgage adviser.
“In fact currently MAS scoops up mortgage advice under “how to find a financial adviser” and then only refers to CISI or Personal Finance Society as a point of reference.
“So, clearly the SFGB will need to start off by demonstrating their understanding of the difference between investment advice, mortgage advice, protection advice etc.
“I like the idea of the broker comparison tool but the execution of making it reliable and verifying reviews will be difficult.”
Burridge added that the industry is already customer led and his brokerage is already on Trust Pilot with one of the highest ratings for firms with over 1,000 reviews.
David Hollingworth, associate director of communications at L&C Mortgages, said: “More information and transparency for customers should be welcomed as a positive move.
“A tool focused on mortgage intermediaries should ultimately only help to promote the benefits of advice generally, as well as allowing individual firms to show potential customers exactly how they operate and what they offer.
“That should ensure that borrowers have the detail required to make an informed choice when selecting an adviser, which in turn will help them get the best outcome for their circumstances.”
Ray Boulger, senior technical manager at John Charcol, said the consumer market is heading in the direction of comparison websites, like it or not.
He added: “Consumers have various places to go to for information but nothing like this in the mortgage market. I think one positive is having to specify the number of lenders a broker deals with in each category, giving borrowers useful information.
“It’ll add a lot of challenges and everything data led won’t be black and white. And it’ll be cost free so why wouldn’t brokers want to participate?
“There could be opportunities for additional information too, showing what areas brokers specialise in like new build. It doesn’t matter what you think, it’s going to happen.”
However, David Copland, director of The Mortgage Alliance (TMA Club) questioned the validity of the tool and how it would be able to compare brokers.
He said: “If it’s filtering brokers with the cheapest fees then those with cheaper fees may be giving advice only by phone, for example.
“And how would you stop gaming, whereby people put wrong information online like writing reviews for themselves or getting friends to do so? I think most people still use brokers by word of mouth.”
Dilpreet Bhagrath, mortgage expert at digital mortgage broker, Trussle, said she welcomes any initiative that improves transparency for mortgage borrowers.
Bhagrath said: “Many are recommended brokers by friends, family and estate agents, without considering others out there. And more surprisingly, one in five who are remortgaging will go direct to their lender rather than shopping around for a better deal.
“We hope that a broker comparison tool will encourage home owners to become more aware of what advice is available to them, broker fees and access to mortgage deals. This should help them feel better informed to make appropriate decisions for their own circumstances.”