The level of ethical behaviour on show within the mortgage industry has increased according to intermediaries, though there is still a lot of work to do.
Last week trade body UK Finance published a banking and finance sector ethics guide, in a bid to push firms to ensure their decision-making process is guided by ethical principles.
Brokers argued that ethics now play a greater role in the industry as a whole, but suggested there are still many areas where this could be improved.
We have come a long way
Andrew Montlake, director at Coreco, noted that the industry as a whole has come under fire for the “poor, misguided” policies of a minority of unscrupulous advisers in the past, but argued that mortgage intermediaries in general enjoy relatively positive trust ratings.
Montlake added that ethical guidance, such as the information provided by UK Finance, is a good starting point as “there are still some examples of firms or people doing things that could be considered unethical”.
He also explained that a desire to act ethically had driven Coreco to look in detail at its own customer journey and how its clients feel at every stage of the process.
“Knowing they are being dealt with in a down-to-earth, honest and ethical way is of primary importance. This took us down the road to create our own Coreco DNA which ensures that all of us act in an ethical way,” he concluded.
Do borrowers care about ethics?
David Hollingworth, associate director for communications at London & Country, noted that some lenders have looked to integrate ethics into their proposition, highlighting the Co-operative Bank and building societies as being seen as “a slightly more ‘cuddly’ proposition than big banks”.
He added that while an ethical approach may gain greater traction with borrowers in the future, there will be a limit to how much extra borrowers are willing to pay, as well as a built-in expectation for a higher level of service.
He continued: “It’s perhaps easier to differentiate through products, so the Barclays Green Home Mortgage helps to show the lender’s backing to energy efficiency and the benefits from an environmental point of view.
“An ethical stance may be more complex than that of course but an environmental stance could sit well with borrowers.”
Ethics are great so long as they don’t cost anything
Paul Flavin, managing director of Zing Mortgages, argued that ethics are something people in general prescribe to, so long as it does not cost them money or require much additional effort.
“If you were offered a two year fixed rate of 1.5 per cent from the Nasty Bank or a 1.75 per cent deal with the Ethical Bank where they donate £50 of your monthly payment to stop poaching in Africa, which one would be the easy sell?” he continued.
Flavin added: “I would like to think our industry is ethically responsible, but there is massive room for improvement from all sides.”