Mortgage Advice To Disappear

The Financial Conduct Authority (FCA) has recently published its final report on its Mortgage Market Study (MMS) and what is catching many peoples eyes is the ‘softening’ approach to non-advised services such as ‘auto-matching’ a client to mortgage products.  In particular the online mortgage and specific request for a product or service model.

The arguments against such ‘algorithm’ based mortgage searches are put by many as follows when considering a suitable mortgage other than the repayments, the best ‘matched’ rates and what the set up fees are: 

Consumers need to take into consideration;

• What if I cannot afford the repayments?
• What if I die?
• What if I can not work any more due to an illness?
• What if I lose my job?

In a recent survey, Royal London reported;

• 81% had no income protection
• 71% had no critical illness cover (should they be diagnosed with a serious illness)
• 42% of mortgage owners had no life cover in place

Comment

The FCA favours more ‘non-advised’ services and we agree that innovation is needed but the difficulty will always be ensuring that a client has sufficient knowledge and experience or is made totally aware and understands the gaps in other areas of their finance to protect those risks as above as well as their mortgage and property.

Getting a mortgage online is potentially not just about rates and fees and we can only see the above concerns/gaps issues rising, as consumers may not think of these to protect their mortgage position and are not likely read the small print.  Caveat Emptor – ‘Let the Buy Beware’ could become a much used term and defence if automated product matching grows and things go wrong.