Mortgage advisers fail to do proper checks on borrowers

An undercover investigation into mortgage advisers has shown up shocking incompetence, with many failing to carry out proper checks on borrowers' ability to repay loans.

Consumer magazine Which? sent researchers posing as first-time buyers to banks, estate agents and independent mortgage advisers and found the vast majority failed to do their job properly. It says only four out of 50 advisers gave acceptable advice.

The findings emerged a day after the Financial Services Authority launched a crackdown on mortgage fraud by brokers using practices including encouraging customers to overstate their pay to get a bigger loan.

A massive 41 of the 50 advisers failed to provide one or more pieces of key information and 35 failed to ensure the individual could afford the loan.

Two-thirds tried to sell the researcher insurance at the same time - often for an unsuitable product - and many failed to tailor their advice to the individual's needs.

Key facts in documents were often glossed over. One told a researcher "a lot of the stuff in there is just blah, blah, blah", while another dismissed the idea that interest rates might fall, just a few weeks before the Bank of England cut them.

"Listening to people's needs and giving tailored advice should be the bread and butter of a mortgage adviser's job, but too many of the advisers that we visited took a 'one size fits all' approach or seemed as concerned with selling an insurance policy on the side," said Martyn Hocking, editor of Which? Money.