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Prudential&#39s Malone warns on execution only loans

Prudential national mortgage club manager John Malone has hit out at

execution-only mortgage services such as that offered by Hargreaves

Lansdown, claiming there are hidden dangers for consumers choosing

such a route.

Malone argues that advice is vital in all mortgage deals to avoid

clients focusing solely on the best up-front rate and missing out on

other benefits that lenders build into their products to help people

manage their total finances, as with offset mortgages.

He says clients will need even more face-to-face advice to help them

overcome endowment shortfalls.

Malone is also concerned about a possible long-term consequence of

the Hargreaves Lansdown service, which rebates part of the

procuration fee back to clients going execution-only, is that small

brokers will be unable to compete and be driven out of the market.

“To squeeze out thousands of small intermediaries due to the

execution-only route will in the end impact on the products and

product design that the marketing departments of innovative lenders

have created,” he says.

Hargreaves head of mortgages Ian Jordan says: “Execution-only advice

has been around for all sorts of financial products. You cannot force

people to take advice. We are more than happy to provide advice where

it is wanted.”

•Mortgage Brief, p64

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