There are certain mistakes that can be costly. Danny Lapierre, a Scotiabank customer, recently learned this the hard way. At the end of March, thinking about freezing a rate in anticipation of his mortgage renewal scheduled for July, he instead inadvertently changed it early by using his financial institution’s mobile application. Result: his monthly payments automatically increased by a few hundred dollars.
“On the bus, on my way to university, I saw a rate of 4.99% over 3 years on the Scotiabank app. I selected it thinking I was going to freeze the rate. I didn’t look at the terms and conditions, I just wanted to freeze the rate. My partner receives an email to confirm in turn and boom: the renewal is already in effect,” says Mr. Lapierre, full of regret.
He and his partner Valérie Côté thus lost their rate of 2.89% obtained when purchasing their first property in 2019 and which was to remain in effect until 1er next July.
As a result, at the beginning of April, the couple had to pay their first bi-monthly payment increased by $168. They will lose around $1,000 between now and July, “but that’s without taking into account the difference in rates that I could have had if the Bank of Canada lowers its key rate between now and then,” says Mr. Stone.
An avoidable mistake
The couple believes that if an advisor had spoken with them or communicated in writing to explain the process in detail, this error would have been avoidable.
Mr. Lapierre and Mr.me Côté contacted their branch, then the Scotiabank complaints office to explain the situation. They were told that we could not accommodate them and that the responsibility lay with them.
But does Scotiabank’s app have the necessary safeguards to ensure its customers understand what they’re signing up for? “This process is simple and includes all the appropriate disclosure steps,” defends Mathieu Beaudoin, senior director of public affairs at Scotiabank, in an email to Duty.
“It states that if you accept the offer more than 36 days before the due date, the renewal will be effective within five business days of acceptance. This process successfully offers a rapid renewal option to many customers,” he continues.
For Mr. Lapierre, the process is so simple that it makes it “too easy”.
Automation of mortgage services
The use of fintech is already widespread in the investment industry. The public has become familiar with automated brokerage applications for several years to buy and sell investments independently online.
We also find this type of technology in mortgage services, for example for the pre-qualification stage which can generally be done easily online. However, several banks require the intervention of an advisor or representative at a certain point in their processes. Scotiabank, for its part, offers to use it in its application, but this is not obligatory.
According to the Financial Consumer Agency of Canada, “a bank can make a business decision to offer a product or service, such as the renewal of a mortgage, via its mobile application as long as it complies with federal regulations related to express consent and handling of complaints.
This consent “may be given verbally or in writing, but must be communicated in clear and simple language and in a manner not to mislead the consumer,” explains the federal agency responsible for protecting consumers of products and services. financial services.
“It’s true that we see a lot of automation in the investment field. But for a mortgage, we need to talk to someone,” believes Sylvain Poirier, president of the Association of Mortgage Brokers.
“Even if artificial intelligence will arrive and bring advances, there is human interaction which will always be necessary,” he argues.
According to a survey conducted last year in the United States by ICE Mortgage Technology, an American firm promoting new technologies in the mortgage sector, a small portion of respondents expressed enthusiasm for taking out or renewing a mortgage through an entirely automated. Only 9% of those surveyed were interested.