View more on these topics

&#39Clarity is key for mortgages&#39

A debate by figures across the financial services industry on making informed decisions about mortgages has found that education and clarity of information are key to consumers&#39 financial capabilities.

The meeting on Thursday last week, hosted by Treasury select committee chairman John McFall, MP, in the House of Commons, promoted clear standard of information on financial products for consumers.

GMAC-RFC chairman Stephen Knight said the key features document is one of the most important developments for the consumer. He believes the advantages are obvious but expressed concerns with the information that will inevitably be omitted, such as how much consumers may have to pay to get out of a particular mortgage. The document is on average six pages long and Knight believes there is a danger, consumers could be overexposed to information.

Nationwide head of external affairs Tim Hughes said lenders should take the lead from credit card companies and take a simple approach to providing key information to consumers.

Knight added that the mortgage industry should look at the pharmaceutical industry, which provides information booklets with over-the-counter medicines. He said pharmaceutical writing is a discipline in itself and argued the mortgage industry should take the same level of interest and professionalism in its writing of KFIs.

Council of Mortgage Lenders director general Michael Coogan said it may be effective to provide consumers with a tool to assess their own personal financial status. In the US, for example, the public is much more astute in knowledge of their credit ratings, although he suggested it would be more problematic in the UK because of the principles of reciprocity where marketing companies cannot share as much information because of data protection issues.

The FSA is working with academics to create a survey to determine the amount of financial capability among UK consumers, something which has never been calculated conclusively. Progress is good so far, according to FSA spokeswoman Vyv Bronk, and she hopes this will help inform policy on financial education.

Conservative economic affairs spokesman Henry Bellingham, MP, said another issue affecting the financial capabilities of UK mortgage buyers is not the initial debt but when additional loans are taken out.

He said: “As people take out additional mortgages, they lose that point of contact from the high street. There is no one around to help them look at the overall financial commitment.”

Recommended

GMAC RFC – Buy-to-Let Tracker

Type: Buy-to-let tracker mortgage Tracker term: Lifetime of loan Tracker rate: Up to 85% of valuation &#45 1.39% above Bank of England base rate, up to 75% of valuation &#45 0..99% above base rate Payable rate: Up to 85% of valuation &#45 6.14%, up to 75% of valuation &#45 5.74% Minimum loan: £25,001 Maximum loan: […]

Ex-LIA presidents in secret summit

A secret crisis meeting took place on Tuesday between the LIA and former presidents who are unhappy with details of the merger with Sofa. Past presidents at the meeting at the RAC Club in London were Andy Bedford, Gavin Tisshaw, Peter Sprung, Len Warwick, Mike Bousfield, Tony Gordon, Christine Leach, Mike Clarke and Brendan Glennon. […]

When cash is not king

I have been invested 100 per cent in cash since setting up my income drawdown plan six years ago. I take about 50 per cent of the maximum pension. My wife who does not have any personal income. I also have two children who flew the nest many years ago. I am 71 and need […]

Bright Grey underwriter Johnson in move to L&G

Bright Grey chief underwriter Stuart Johnson is leaving the firm to join Legal & General. Johnson will be leaving Edinburgh-based Bright Grey in November so he can move south to be closer to his family. He is regarded as the driving force behind Bright Grey&#39s underwriting team. Since March 2003, the team has grown from […]

Scheme pays explained

By Fiona Hanrahan, senior product insight and technical support analyst We’ve received lots of queries on scheme pays and when it can be used. This article explains how it works and the conditions which apply. What is ‘scheme pays’? If an individual exceeds the annual allowance (AA) and an AA tax charge is due, they […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com