Whether intermediaries like it or not, the process of attracting business is a necessary one and can often be tedious and exhausting. While there is always a pool of work, not only with the initial client dealings and keeping up with the movements of lenders, the constant challenge is to ensure that there is enough work to remain busy in the future.
So it comes as some surprise, and disconcertion, that a report by edeus indicated that some new applicants are not using intermediaries for mortgage advice. The research showed that of the 500 consumers questioned about their attitudes to mortgage finance, 58 per cent would approach their own bank or building society, or another mainstream lender for mortgage advice rather than go to an intermediary.
A reported 40 per cent would go to a mortgage adviser or an IFA, so there is, at least, some reassurance, but this is likely to cause some concern to the intermediary market. The first question that any consumer has to be asked is why would they go to a high street bank or building society directly in the first instance?
Easier and cheaper?
The results showed that 26 per cent said it was because banks have a wide range of products, 21 per cent said because it’s easier than going to a mortgage broker or IFA, 18 per cent said it was because their bank or building society already knew their personal financial circumstances, 14 per cent said they would be able to secure the most favourable rate by doing so and 12 per cent said it was because they have a well known brand name.
However, perhaps more concerning for mortgage specialists is that the remainder believed that they would be able to get a better deal from a mainstream lender or thought mainstream lenders had access to every type of mortgage deal. Around 80 per cent of mortgage business is done by introducers, so there is apparently no need to worry about levels dropping, but what can brokers do to ensure that there is a constant level of business?
Firstly the key fact about the research is that the majority of respondents had an adverse credit history or spent a large amount of their income on paying debts, so those who are apparently least informed are categorised as being ‘most vulnerable’
Of those surveyed, 78 per cent failed to recognise that mortgage intermediaries could provide access to mortgage products that were not available directly from a lender. 35 per cent of respondents believed that mortgage intermediaries and IFAs always charged a fee, and 20 per cent stated that they did not understand how the process of using a mortgage broker worked.
Nicola Severn, head of PR at edeus, says: “Although regulation and ‘Treating Customers Fairly’ initiatives have made inroads, more needs to be done to educate individuals about the basic areas of mortgage advice, such as payment structures and the varying levels of impartiality.
“For those of us who work in the mortgage industry, it is easy to forget that many consumers don’t have the same interest and in many cases just don’t know how the advice and intermediary community works. They often don’t realise mortgage intermediaries can provide access to financial products that borrowers would not be able to access through a high street lender. There are lots of misconceptions regarding mortgage intermediaries and advisers and with aggressive promotion from high street lenders – more should be done to educate consumers and make them aware of the many benefits of seeking independent financial advice.”
Poor education or bad marketing?
So is this a case of bad education and poor knowledge on the part of the consumer, or the intermediary not publicising themselves efficiently? Simon Sirman, mortgage advisor at Plan Invest, says: “Other than the Yellow Pages, Thomson Directory and our website we don’t do any direct promotion as most of our work comes through client referrals.
“A lot more can be done as going through IFAs and brokers adds value to clients but it is a case of how we get the message across. There is a definite lack of awareness in the public about the service that IFAs and brokers can offer.”
In agreement is Andy Pratt, chief operating officer at Alexander Hall, who claims that the market for intermediaries has grown with companies offering value for money, and subsequently getting promising promotion from satisfied clients.
“The main area for promotion is from word of mouth, as one client has a good experience because of the service and goes away satisfied so tells their friends and family,” he says.
“Brokers can offer clients the expertise of working in the mortgage industry on a daily basis, and once they see the value of that it comes down to whether they want to do the leg work themselves. So it really is a question of time and expense. The key thing is service as a few years ago it was hit and miss but since regulation things are much better.”
With an apparent reliance by brokers on reputation for work, it seems that they are kept busy with what is put their way. However as called for recently by more than one lender, some education of the masses would not go amiss.
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