Mortgage advice needs to be improved, says watchdog
The quality of mortgage advice being handed out is "mixed", and some firms need to improve their standards, the regulator found. The Financial Conduct Authority (FCA), which introduced stricter rules around the way mortgages are sold last year, has reviewed the quality of advice provided by lenders.
The new regime means most consumers now receive advice, with the aim of ensuring they are only recommended mortgages which are suitable for their needs.
But the FCA found that while most customers receive suitable advice, there is scope for improvement.
It used mystery shopping exercises, file reviews, on-site visits and consumer research to look into the quality and suitability of mortgage advice provided. The FCA found that 59% of mystery shops and files resulted in suitable mortgage recommendations to customers - but in 3% of cases advice was unsuitable.
Paul Smee, director general of the Council of Mortgage Lenders, said: "Lenders have had a huge workload in implementing the new rules and, in many ways, the report's conclusions chime with what firms are telling us about the challenges they face."