I saw a Tweet a little while ago from a BBC journalist, talking about an email he’d received from a bank promoting what they said was a great ISA rate. He compared the offer with the best buy rate and there was quite a difference between the two. The journalist was rightly calling out that the best buy type of product promotion isn’t always clear or helpful for customers.
Do you feel like we do?
My initial reaction was “that’s easy for you – you look at best buy tables all the time, you understand the difference between the rates and you know what to look for!”. But, it did make me think – how many customers would know the same?
Won't get fooled again
Price comparison websites have driven huge amounts of change in the other financial services markets like car and home insurance. It’s become a lot easier to compare policies and prices and shop around when you get your renewal, so why hasn’t the same thing happened with other banking products?
I know some savers are very savvy and actively find the best product for their needs or the best returns they can, but it doesn’t feel like this is common behaviour. I think there’s still a long way to go with other products like current accounts and mortgages.
Maybe I'm amazed
When some banks design their own products, they do a vast amount of research on the price point and features and benefits of what they want to offer. This includes benchmarking against the competition and knowing how their proposition compares across the market. So, if banks already know this, why don’t they share this information with customers? The cynic in me suspects it’s because not as many people would then buy the product.
Show me the way
This gets even more complicated with mortgages which are predominantly sold on an advised basis. Mortgage products, criteria and the application process can be difficult to negotiate, so having the right advice and someone to help you through the journey can be crucial, but if a customer takes their mortgage advice directly from a bank, do they really know that they’re only getting advice on one lender’s products?
Dazed and confused
With over 10,000 mortgage products across the market and myriad different lending policies and criteria, the implications of this can be huge. This isn’t about the quality of the people; mortgage advisers are professional individuals. They’re well trained and have to achieve a high level of formal qualification to give advice. This is about the advice they can give.
But – can it be right for the customer to only be given advice about the best product available from one provider? Is the customer really encouraged to do their own research and compare the advice they’ve been given against products which are available from other lenders? Even if they did, how many customers have the time, inclination and a sufficient level of understanding to make the comparison worthwhile?
Walk this way
For a financial transaction as important as a mortgage, I believe that customers should have access to all the information they need to make an informed choice. Mortgage intermediaries who are independent and have access to the majority of lenders across the market are often best placed to provide this advice.
With a little help from my friends
They can match a customer’s unique needs and circumstances to the lender who is the best fit, not just on price but on criteria, features and service. They work through the detailed information available and the comparisons from each provider to give impartial advice so the customer knows that they've been offered the best product for their needs.
Until banks are prepared to give customers the open and transparent access to the information I think they need and deserve to make a fully informed decision, or until comparison sites make it easier for customers to do their own mortgage research, I’d like to see all customers referred to an independent intermediary who can validate the advice they’ve been given before they choose their mortgage provider.