Speaking at the BSA Conference in Bournemouth on 23 May, broadcaster Paul Lewis claimed that there was a deliberate act in the industry of making mortgages so complex that buyers have no choice but to use a broker, pushing the costs up.
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Lewis was critical of arrangement fees added by lenders, calling them ‘part of the complex choice’, but also of the added fees that paid the commission for the broker. He referred to the added costs as ‘finance not service’ in a general attack on banks.
Lewis also criticised the amount of mortgage products on offer, with the figure having risen twice from 6,437 to 10,665 from when he initially complained in a speech towards the Council of Mortgage Lenders. Lewis encouraged lenders to keep their product offering simple and that by keeping their products transparent the public will be offered the chance to compare the true cost of mortgages.
Lewis said: “No-one can rationally choose between all this. It’s not choice and competition – it’s complexification - the deliberate act of making products so complicated that no-one can understand them. (Customers) can never be sure if they have been sold the right product or not (and they) find it hard to tell when the product goes wrong.”
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Alan Lakey, senior partner at Highclere Financial Services, said: “He’s right and he’s wrong, there are people who will rip off their clients but there are people who will charge a minimal figure to cover the costs of regulation and the time sourcing. The average person could work it out themselves in two to three hours, but most people would rather go to a broker and have them do it for them.”
