For retail customers, ABN AMRO offers the option of arranging a mortgage online without first getting personal advice from the bank. Especially more experienced customers are tapping into this option. For example customers who want to top up their existing mortgage, or take out a second one.
About 55 per cent of ABN AMRO’s mortgages are sold through an intermediary. The other 45 per cent is arranged directly with the bank. Ten per cent of all mortgages that are arranged with ABN AMRO directly do not involve any advice. These are called execution-only mortgages. Since the ban on commission came into force , that number has remained roughly the same. ABN AMRO expects the number of execution-only mortgages to remain relatively small.
Knowledge and experience test
Wendie Cornelissen, Director Retail Mortgages at ABN AMRO, explains. ‘Especially experienced customers take out execution-only mortgages. That makes sense, since a mortgage is a complex financial product, and the consequences of a “wrong” choice can be dramatic. To protect our customers we offer them a knowledge and experience test, which helps them determine for themselves whether they have sufficient knowledge and experience to take out a mortgage without seeking advice first.’
This test is mandatory, and customers who take it are contacted by ABN AMRO afterwards by phone. Once customers pass the test, they can take out the mortgage online or by phone. If a couple wants to take out a mortgage together, both must do the test. And, needless to say, if customers change their mind during the online process and want the advice of a bank employee after all, the bank offers that option.
Ban on commission
The execution-only mortgage is a result of the ban on commission. This ban was issued on 1 January 2013, with a view to improving price transparency of financial products. Advisory and processing costs are now charged separately rather than being included in the price of the product itself.