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Untangling the World Wide Web

Scott Philipson

June 24, 2006

The internet now influences every aspect of a mortgage broker’s working life. It is essential for sourcing and submitting business, progressing cases, checking commission payments and providing clients with product and service information.

Even though mortgage broking is, and will always remain, a process that is fundamentally all about giving clients face-to-face advice, the truth is borrowers are increasingly validating the advice they are given via the web.

A company website is therefore no longer an optional extra – it is an absolute necessity for every broker. The truth is, however, most brokers have relegated their websites to the bottom of their ‘to do‘ lists, both in terms of ensuring they are comprehensive and up-to-date and making certain they are fully compliant.

Importance

Websites can be either online ‘brochureware’, i.e. they act like a brochure in the way in which they present information, or they can be transactional, i.e. they enable clients not only to browse for information but to also buy.

Every intermediary should have at least a basic website that provides online information about their business. A poorly presented or out-of-date website or, perish the thought, no website at all, is not good news in this day and age.

We have noticed an increase in the number of enquiries from both appointed representatives (ARs) and directly authorised (DA) brokers about the availability of white-label websites. In developing such a facility for our members, we came across a number of basic errors being made by brokers, both from a regulatory and commercial perspective.

Websites are no different to any other form of promotional activity and need to comply with the Financial Services Authority’s (FSA) Financial Promotions rules. Here are the most common errors we found:

Believe it or not, either no risk warning or out-of-date risk warnings (‘Your home is at risk’ ) being used. You must use the new warnings published by the FSA.

Where correct risk warning are being used, they are sometimes not being given sufficient prominence. Warnings cannot be buried in ‘terms and conditions’ sub-pages and users should not have to scroll to the bottom of a page to see them. Warnings should also be in a suitably prominent font and size and in close proximity to the product being promoted.

Representative APRs need to be displayed and, once again, need to be prominent. When APRs are being quoted, the correct FSA wording, ‘The overall cost for comparison is X.X per cent APR’, must be used. Calculating representative APRs for non-conforming products needs to be done using a special set of rules and an adverse credit risk warning must be displayed.

Important information must be clear and displayed within close proximity to the product to which it refers. It is not acceptable to hide information in small print, on sub-pages or refer users to literature only available offline. The use of less prominent fonts or colours is also unacceptable.

Banner advertisements and hypertext links may also be classed as adverts, depending on their content. If they display more than your firm’s name and contact details and, particularly if they contain specific product information, they will be classed as Financial Promotions. Like all other Financial Promotions they need to be clear, fair and not misleading and, if they are product specific, should provide a balanced picture of the product, the risk involved and the commitment required.

Commercial issues

The above issues relate to regulation, but we also came across basic commercial issues. Here are the most common:

Some websites are poorly designed and look home made. Websites are not expensive to have properly designed and you can even subscribe to white-label websites for a modest monthly payment. One benefit of using a white-label site is that product information is usually kept up-to-date on your behalf.

Which brings me on to the next issue of out-of-date information. Having a website which is displaying out-of-date products or rates causes frustration and undermines borrowers confidence. If you have a website, you must keep it up-to-date.

Make sure your website contains basic contact information. There is nothing more frustrating than visiting a site which has no phone number or e-mail address. Make the contact details (including availability times) easy to see on each page.

Integrate websites with other promotional activities. If you are advertising, or sending out mail, ensure your website address is prominently displayed. Also, think about ways in which you can use your website with other forms of promotions. A press advert may only provide limited information, but it can direct readers to your website where they can get as much detail as they want.

Use client testimonials. Ask existing clients if they are willing to provide an endorsement for your website. Include a photo of them if possible. There is nothing more reassuring than hearing positive comments from other happy clients.

Don’t over-complicate or provide too much information on your website. There is nothing more daunting than being presented with a page full of text – other than having to click through pages and pages of data to find the information you’re after. The challenge with websites is to provide information in digestible bite-sized chunks and, ideally, in such a way that users don’t need to click through more than three pages to get to the information they are after.

Don’t dismiss the idea of developing a transactional site. Some product providers provide bolt-on facilities which enable you to transact certain types of business, such as general insurance.

Get feedback from clients. Find out if they have used your site and what they think about it.

Websites are a wonderful addition to an intermediarie’s armoury, but only if they are kept up-to-date and compliant with FSA regulations. Don’t overlook this important business tool.


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