The Financial Conduct Authority (FCA) has reviewed the mortgage advice that has been given to customers ever since the Mortgage Market Review came into force just over a year ago. It has discovered there is room for improvement to be made in this area so more customers can benefit from better advice. The FCA used a number of means to determine whether people were receiving good advice when looking for a mortgage. These included file reviews, consumer research and mystery shopping exercises among other techniques. As a result it was able to gain a fairly accurate idea of how much advice people were receiving, and how good that advice was. 59% received proper recommendations for mortgages From their research, it was found that 59% of the mystery shopping exercises and file reviews led to agreeable mortgage recommendations that were suitable for the people involved. However 3% of the total cases looked at received unsuitable recommendations. However this leaves a big grey area and indeed, 38% of the cases looked at were revealed to have unclear recommendations made to them. This basically means there is some uncertainty over whether the recommendations had a sound basis or not. Suitable advice is very important The Mortgage Market Review introduced many changes to the way people apply for and are considered for mortgages. They are now able to receive advice on which type of mortgage is best for them. Many people find the questions intrusive and indeed some research has revealed that people are making more purchases in cash to hide their spending habits. Many feel they could fail to get a mortgage if the lender discovered certain elements of their spending were outlandish. However, the importance of suitable advice is clear. According to the FCA, they have issued feedback to all the firms they went to in the course of developing their study. The good news is many of the firms whose standards were not deemed to be as high as they should be are already making the required changes to remedy this. Some lenders have invested in their services already as well In the past some lenders would not have worried about giving advice to those people looking for a suitable mortgage. They have perhaps made the biggest strides in the right direction for implementing systems that permit them to give advice for the first time. However there is a fine line to tread here. The research from the FCA also discovered that some firms have become too stringent with their improvements and processes. This has occasionally meant a firm has become very precise in the way it questions people about their spending habits and financial circumstances. As such it might mean they become stuck in a process that is far too lengthy and unnecessary for those concerned. Clearly there is work to be done in this area. However it is hoped that the research done by the Financial Conduct Authority will help everyone move towards the right outcome.
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