Research shows nearly half of consumers do not seek advice when in mortgage difficulty

6 July 2009

In a speech to the CML (Council of Mortgage Lenders) today, Adam Phillips, Chairman of the Financial Services Consumer Panel revealed research indicating that two in five (41%) of those having difficulty paying their mortgage did not seek advice in dealing with their problems. And yet, seven out of eight of those in difficulty thought their problems were serious.

Of those who did seek advice, two thirds (65%) went to their mortgage lender, while one in four went to Citizens’ Advice (CAB). Consumer experience of lenders’ advice was mixed: some felt their mortgage lender was unhelpful and inflexible, whereas others felt their provider did all they could reasonably do to help them.

It appears that the most significant driver for those who do not seek advice is not a lack of awareness of or difficulty in accessing advice services per se, but rather their perceptions of the advice sector and their own situation. These perceptions can lead consumers to conclude that seeking advice is either unnecessary or inappropriate for them. This demonstrates clearly that more needs to be done to change consumers’ behaviour and perceptions of what already exists.

Adam Phillips, Chairman of the Financial Services Consumer Panel, said:

“When people get into difficulty with their mortgages, they need constructive help and advice on the best way forward.  Mortgage lenders have a duty under the principle of Treating Customers Fairly both to help their customers in arrears, and also to tell them about independent sources of advice.  There is an urgent need for more investment in publicising and supporting sources of information and advice in this area. We need to do much more to encourage consumers in difficulty to get advice early. Debt advice agencies must not be seen as a last resort when all else has failed.  I am calling on all mortgage lenders today, to do more to encourage consumers in difficulty to get advice early, before the problem becomes a disaster for both parties.”

Notes to editors

1. In March 2008 the Consumer Panel undertook two research projects:

• Questions were added to the research agency TNS’s face-to-face omnibus survey to establish whether consumers in arrears sought advice; if so, who they sought it from and; if not, why not.

• The consumer forum on the website www.moneysavingexpert.com asked users of the site to provide feedback on their experiences of asking for and receiving mortgage arrears advice. 

An executive summary of the research findings.

2. The FSA established the independent Financial Services Consumer Panel in December 1998 to advise its Board on the interests and concerns of consumers and to report on the FSA’s performance in meeting its objectives. The Consumer Panel has statutory status.
   

3. The emphasis of the Panel’s work is on activities that are regulated by the FSA, although it may also look at the impact on consumers of activities outside but related to the FSA’s remit. What we're doing for consumers explains more about the work the Panel is doing.

4. The Consumer Panel brings together a wide range of relevant experience. This includes financial services regulation, working with vulnerable consumers, consumer protection, consumer education, front-line money advice, legal expertise, competition policy, public policy analysis, market research and media.

5. There are currently eleven members of the Panel as listed below (for further information on individual members, see Who is on the Panel

Adam Phillips (Chairman)
Kay Blair
Michael Chapman
Stephen Crampton
Caroline Gardner

Tony Hetherington
Nick Lord
David Metz
Lindsey Rogerson
Carol Stewart