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Tesco and Post Office silent on mortgage business model after non-advised ban


Tesco and the Post Office are remaining silent on how they will restructure their mortgage businesses following the FSA’s decision to ban non-advised sales.

Execution-only sales will not be permitted from 26 April 2014 for the majority of borrowers, except under limitied circumstances such as contract variations and deals arranged online or via post.

Tesco and the Post Office recently joined the mortgage market to offer their own ranges of products. Both propositions offer a direct-only, non-advised service.

Both lenders offer their products online or over the phone rather than through intermediaries, while the Post Office introduced “mortgage specialists” into five branches to offer information but not regulated advice.

Neither one is prepared to specify how they intend to meet the new regulatory requirements.

A Tesco spokesman says: “As a responsible lender we will comply with future regulatory requirements and are currently examining the detail of the new regulations.”

Post Office head of mortgages John Willcock says: “Earlier this year, we introduced mortgage specialists into a number of branches and will continue to roll out this service to other branches across the UK. We are currently reviewing the contents of the MMR and will make any appropriate changes to our service to ensure we conform with those taking place in 2014.”

London and Country head of communications David Hollingworth says: “Whilst there is the ability for the Post Office and Tesco to do some execution-only business and provision of information, as soon as they start to have a conversation about products, that would seem to fall under the advised process.

“The FSA has said it does not want people pricing their products lower online to try and push people through a non-advised process. You can still transact that way but it does not want cheaper products online to become a way of side-stepping the advised process.”


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Anthony Badaloo dipPFS ACPA 29th October 2012 at 9:44 am

    Interesting development here. Just when we thought the online world could pose a threat to Financial Advisers, It seems that we have some regulatory stipulation which may prevent most consumers from going direct to save time and cost.
    Even more surprising, is that the mighty Tesco Bank is being inconvenienced in their push into the Financial Services space.
    This may well prove a boon for the Adviser community, who could well be now working for Tesco!

    Anthony Badaloo is Principal at Church Hill Finance who are independent financial and mortgage advisers.

  2. Why don’t these providers simply provide products through brokers and become a product provider, instead of going to the expense of training and running sales teams. Tesco’s in particular have no past experience in running a financial services sales force and I can see that their mentality may in fact be a big problem going forward.

    I hope that the regulator enforces these new regulations and make sure that providers like Tesco’s and the Post Office do not circumvent the new regulations. It’s about time that the regulator worm supportive of the advice industry that is so successfully tried to destroy.

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