Consumers do not seek advice when in mortgage difficulty

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."