Mortgage advice

AndrewSmith

Whilst I accept that it is sometimes possible for customers to arrange less expensive Protection using the Non-Advice route it does need to be pointed out that in doing this they have none of the protection offered against mis-sale that they automatically get via a broker. On the non-advice route, no fact find is completed therefore the company providing the product cannot be help accountable as to the suitability of it to the customer's circumstances. Let me give you an example of this:

A client came to me about a year ago, I arranged his mortgage and, as per guidelines laid down by the compliance company I emply, I discussed protecting the mortgage with him. I suggested that, amongst other things, he should effect a Term assurance policy on a guaranteed premium basis for the amount of the new mortgage less his existing cover. I also recommended that he take critical illness cover for some or all of the mortgage amount also. This client subsequently opted to approach the same life company I had recommended but to go himself using the non-advice route. He simply asked for the cheapest Term Assurance they had and was interested in discussing anything else. What he actually ended up with was a Term assurance policy with 'Reviewable' premiums which initially was of course cheaper than the one I had recommended. What he did not realise though until his wife was going through the papers following the client suffering a stroke last autumn was that his premiums are likely to increase every 5 years. His wife tried to complain to the company concerned as a mis-sale, and tried to claim against them for not recommending critical illness cover. The company had no case to answer. They had a recorded telephone call from the client in which he clearly stated that he was only interested in effecting the cheapes policy right now, and that his opinion was critical illness cover was a waste of time.
The client's wife subsequently also complained to my company stating that I should have provided critical illness cover to her husband. I provided a copy of the Suitability Letter and file notes clearly showing that I had recommended it, and it had been declined as I had a signed declaration from the client that he wished to effect none of my recommendations. Had I not recommended critical Illness the client may have had a valid claim against me (accoring to the compliance company I use , and the FSA employee I spoke to about the case to ensure I had acted correctly).

Freedom of choice is something that I support wholeheartedly. It is the job of the advisor to make the client aware of any shortcomings and any protection deficientcies. Whether the client accepts this or not is their choice. However this should not be referred to as 'Trying to flog uncompetitive ancillary products'. As a professional Advisor with over 12 years untarnished history in the industry I find this personally insulting. However it is your opinion and I respect it as an opinion. It does not, however, mean that it is automatically right.

The general public called long and hard for regulation of mortgage, mortgage advisors and general non-investment insurance product sales. Since 1/11/04 mortgage business one since January 2005 non-investment insurance contracts are now regulated by the FSA. As you know Martin this has resulted in a far greater workload for the Advisor however by most it has been welcomed. Part of that process though is that we have an obligation to recommend appropriate protection. The client has the choice what they do as a result of the recommendation.

I think more emphasis must be put on that when taking the non-advice route you are giving up some of the regulatory protection offered with the advice route.



An earlier post of mine HelpwhereIcan which wholeheartedly supports your sentiments.

Andy

P.S. Something is only Uncompetitive or Ancillary until that time comes when you need to claim. Then it becomes the most important and valuable protection you have, and is where you really see whether you have true value for money when the policy pays out (or not).

Ian_W

homer_j wrote:
Having been reading a little bit about the website, I was quite suprised to find out that the "not profit driven" claim actually means that Martin earns most of his income from our clicks on his links and doesnt mind becoming rich from it. Do not get me wrong, I understand that there are operating costs and no one works for free but maybe this is some of this spin you talk about.

Caps for the importance of differences between freedom of the journo world compared to the financial one

UNDER NO CIRCUMSTANCES WOULD ANY FINANCIAL INSTITUTE BE ALLOWED TO CLAIM "NOT PROFIT DRIVEN" AND THEN STATE THAT THEY FORM MOST OF THEIR INCOME FROM THIS PRODUCT.

Come on Martin, lets start playing on the same level, get your IDD on the opening page to say exactly what you get paid for what click what we do and then offer a link that we can click for free and not through your referal and ensure that your wording is not mis-leading.

I'm sorry that is absolute, unadulterated, piffle!!

We are better than you cos we have to say up front what we're earning. The reason for that homer is that you, or at least your predessors, brought it upon yourselves by your [or their] previous misdeeds in selling financial products to the public totally driven by a desire to make profits for yourselves and the financial institutions you serve.

Let's play a little game... name a word beginning with "M" that follows PENSIONS, ENDOWMENT, INSURANCE to make a well know phrase or saying ... get my drift. The reason you're regulated is that there were, and probably still are, those amongst your numbers who were driven totally by the profit they made for themselves rather than how beneficial the product was likely to be to the client. It's not a badge of pride - but a penalty for past misdeeds. What misdeeds, apart from suggesting in some instances execution only services might suit some "savvy" people, has Martin's website committed? How many people can say, I lost loads of money, or struggled to repay my mortgage because of this site? Quite the opposite, in fact.

When Martin offers a choice of links he lists the ones that pay the site, along with a similar number of ones that don't. If anyone objected to him making money from clicking on a link, they have the name of the company so could sneakily find their website - BUT WHAT'S THE POINT? I've been on those websites hundreds of times and it hasn't cost me a single penny.

Your IDD lists the commision you will earn because you're recommending I buy a specific financial product. This website hasn't sold me or anyone else anything [other than perhaps on ethos on moneysaving] and hasn't made money directly from me. What possible interest to me is it that it gets 0.001p per click when I visit moneyfacts - or more importantly, what detriment to me is it that I don't know?

And perhaps, homer, now you've gotten around to reading the rest of the site you ought to do so properly. The bit you're refering to when you say, Martin earns most of his income from our clicks on his links actually says - I've no intention to hide the fact it is a substantial part of my income. Hope you're a bit more careful with what clients say in your factfind!! The full text is towards the bottom of THIS PAGE.

Any Financial Institution that claimed it was not profit driven would be laughed out of court. Making a profit is the ONLY reason most exist, regulation is the price of doing so by dubious products, inappropriate sales, unfair and unreasonable charges.

Martin Lewis is an extremely skilled self-publicist who, I'm sure, from his writing, broadcasting and this site earns a very, very good living and good luck to him - but the words NOT PROFIT DRIVEN are very different IMO to the words NON-PROFIT MAKING - which you seem to suggest are one and the same.

HelpWhereIcan

Have to agree to a large extent with your sentiments Ian. I personally do not care how Martin earns his money and agree that he has been clear in stating the aims and workings of this site.

Similarly, I have no objection whatsoever to telling people how much commission I will earn for reccomending a particular product. I have been working in a regulated environment since 1995 and have always had to do this. I feel confident enough in my abilities and the job I do to not be ashamed of telling I customer that I earn a living from giving them advice and making a recommendation. I always offer them the choice of paying a fee, but most choose to 'allow' me to take commission.

What I have an objection to is the service I offer being downplayed and being portrayed as a commission hungry salesman that has nothing to offer and does not merit a second thought when it comes to protection and insurance contracts.

Afterall, I will only try to 'flog' the customer an 'uncompetitive' ancilliary mortgage life protection contract that includes waiver of contribution, has a mortgage guarantee, guaranteed insurability options, the ability to modify the amount covered and add or take away different types of cover. I would argue that anyone who does not know what those terms mean or why they may be of benefit to them should take advice rather than go the non advised route. Afterall, if there can be such a difference in a simple life policy, imagine what differences there can be between policies offering Critical Illness and built in PHI.

Even worse, I will probably try to make the customer aware of the potential need to look beyond covering just the mortgage and to provide extra protection for their dependents. Being commission hungry, I will try to explain to a customer why they should have a decreasing term assurance to cover the mortgage and a seperate level term plan to cover their dependents rather than rely on a level term assurance plan building up extra to provide for the dependents (again, not sure of the reasons or benefit of this? - maybe you need advice).

I will also have the cheek to suggest that a customer may look to arrange their plans through a 'Multi plan' offering that will save them money on a number of different 'cheapest' policies through a number of different insurers. (don't know why this may be? then you probably need advice)

Of course, the more the client does, the more I will earn. I fail to see where this makes my service 'uncompetitive' or worthless (not a quote, more paraphrasing I admit). Surely the better I do my job and the better the client and their dependants are protected, the more I deserve to earn. I too am clear in the purpose of my business - that's why I am called an adviser (I offer advice) and that's why my IDD says I will earn commission, that's why I tell my clients how much it will be. None of this means I am anti consumer or anti choice - I am very much for them - but I am very much pro advice and do not believe that the benefits of advice should be played down solely in favour of cost.

As Martin says, he is helping people save money on all types of purchases. I would just prefer the members of this site were not discouraged from talking to their adviser about protection. We are the mortgage good guys (as Martin says), but we also seem to be the protection bad guys - does not match - a professional is a professional. It's like saying that a doctor is the good guy when it comes to diagnosing your health problems but will always prescribe the drug that gives them the biggest kick back from the pharmaceutical company so you are better off sourcing your own drugs on the internet once you know the generic name of the drug they have prescribed!!

I am happy for my clients to rate shop their insurances - as long as it is like for like. I will always offer a like for like cost guarantee, but have found that once the difference in cover is explained many customers will pay an extra £2 or so a month to get better coverand those that won't will sign to acknowledge they are not following my advice.

If they want to offer me the opportunity of sacrificing commission and taking a fee for a no advice service, then I will look at it for them. But I do not think the public benefits from being told that the service we offer for protection etc is worthless and they should just go direct to non advised to get the cheapest terms possible.

stanmoresaver

HelpWhereIcan wrote:

What I have an objection to is the service I offer being downplayed and being portrayed as a commission hungry salesman that has nothing to offer and does not merit a second thought when it comes to protection and insurance contracts. .

Exactly.

Before your MSE time HWIC, there were verbal fisticuffs some Howard Stern-esque postings following Martin's revised "sneekily get mortgage advice for free" article- which, in isolation, is IMHO a reasonable article (some points excepting), especially given the ethos of the medium it uses as it's mouthpiece.

My advice is don't go there- some posters , not all, will not listen but just choose to broker bash and bask in their self righteous perfect world.

Take a look at the thread before it was seperated and see what i mean.

SS

HelpWhereIcan

By the way, I have done some research of my own into just how uncompetitive I am compared to Cavendish and Moneyworld.com.

Getting quotes for myself for 200k (35 nb, smoker) over 20 years, there was 35p difference between Cavendish and Moneyworld. Cavendish gave Friends Provident and Moneyworld gave Bright Grey.

Let's play a game shall we?

Can any moneysavers out there tell me why someone might want to go for Bright Grey over Friends Provident and pay the extra 35p?

Can any moneysavers tell me why Cavendish and Moneyworld offered two different companies for the same given circumstances?

Neither company quoted Waiver of premium (Cavendish using Webline had the Waiver option defaulted to No) - Can anyone tell me why this might not be a good idea?

Both companies quoted using an assumed interest rate that was unclear until you looked at the full illustrations. Can anyone tell me why the interest rate assumed is important and which policy was 'better' when you take this into account?

I have a family history of diabetes and stroke and myself have moderately high blood pressure that is managed without drugs. Can anyone tell me what effect this and the fact that I am an overweight smoker may have on the terms I may be offered by each company is?

As for me, yes if I sacrificed no commission and offered a full advice service the policy I would normally offer would be approx £1.59 pm more than the Cavendish quote.

However, if I sacrificed all my commission and took a fee, I could have been £1.17 pm cheaper than Cavendish but I am not sure that the customer would have been aware of the differences in the policies.

At the same time, I could sacrifice some of my commission and still offer a policy a few pence cheaper than Cavendish without charging a fee. Not sure that I will ever take the step of being purely online and non advised, but Martin has helped to show me where I have to position myself in terms of commission sacrifice if I were ever to turn my back on free advice and concentrate on volumes rather than having customers who I look after for the long term and recognise in the street.

MSE_Martin

I think it's getting close to calling this particular discussion a day

I dont think it puts brokers in the best light. I want to remind you of something this is a Consumer Revenge website. It is not here to promote the views of any industry, including mortgage brokers - even though many do a good job.

I am well aware there are many sites for the IFA/broker industry. This navel gazing is best served there - (i suspect my name isn't well received there anyway).

I would love mortgage brokers to stay on here. Many have been exceptionally good at helping people take on the banks and building societies and stopping them being screwed, yet this is not a site or board for brokers its here for consumers and i'd ask you to remember that.

This isn't aimed at any specific posts, just the generality of the discussion.

All the best

martin

Joe_Bloggs

It is sometimes theraputic to 'vent ones spleen' and have an outburst at the world. I have learned about some of the pressures that are faced by brokers within this thread and how they feel represented. I thank all those who have had their say.
J_B. (Let it continue !)

AndrewSmith

J_B,

You are a gentleman and I thank you for your observation and comment. We really do have greater pressures to work under than ever before,thank you for appreciating it.

Andy