When a person or firm publishes or communicates an advertisement (Financial Promotion) designed to persuade a customer to take out a mortgage, that advertisement must comply with rules laid down by the Financial Services Authority (FSA).
These include requiring the Financial Promotion to carry a ‘risk warning’ or ‘wealth warning’, which alerts customers to the fact that they could lose their homes if they take out a loan but then fail to keep up the repayments on it.
Any Financial Promotions should also be clear, fair, not misleading and balanced in other media. However, it appears that these guidelines are being ignored by some parties. A recent FSA investigation identified ‘shortcomings’ concerning Financial Promotions over the internet. This has caused some concern, especially in relation to how consumers access information that is relevant to them and how key material is brought to consumers’ attention.
Clamping down
Common failures identified by the FSA were omitting risk warnings altogether and failing to make important information prominent or clear. What it found was that some firms were deliberately positioning risk information separately from the product-specific information, leaving it for the consumer to link risks with the actual product. Others were referring consumers to statements in documents held offline, while some were locating key material at the bottom of the screen, or using a font size or colour that diminishes the apparent importance of the information published on the site.
These may seem like petty infringements – especially if your website was designed by someone outside the industry – but this is an area that the FSA is keen to clamp down on, and firms should check the FSA handbook for guidelines on getting it right. Intermediaries that are part of a mortgage network as appointed representatives (ARs) should make sure that the site is compliant and that their network is keeping up to speed with developments coming from Canary Wharf.
Don’t be dissuaded
Disquiet shown by the FSA should not, however, dissuade brokers from embracing the internet as both a marketing tool and as a driver of new business. If you do not yet have a website, or need to upgrade, some lead generation firms offer a ‘free website’ when an intermediary signs up. Many of these are ‘state of the art’ and incorporate the FSA regulations regarding Financial Promotions on the internet.
There are plenty of other low-cost and free agency agreements available in the market. Intermediary firms need to choose which services they need and want to offer clients, research which agreement best suits their business and if they will realistically be able to meet its demands.
Sites offering agencies are keen to take on intermediaries to boost their own distribution, and in return, will also offer incentives to brokers, such as free sourcing software.
The advantages of having a successful online brand are numerous. It provides access to a huge market, can make a firm appear to be bigger than it is through its agency agreements, create revenue streams through the associated links, and position a firm well for the continued move to online research and shopping. Once an effective site has been created, it then begins to take on a value in itself, which can be substantial.
Nat Daniels is managing director of Mortgage Angels
