The starting point to claim compensation for mortgage mis-selling is to send a complaint letter or a formal letter of claim to the firm that made the sale of the loan. The letter should contain all of the information necessary to identify you, the property and your mortgage. It should also outline why you think you were mis-sold your policy. The letter should contain as much of the following information as possible:-

  • Name and address of the company who employed the salesman or advisor
  • Mortgage agreement identification number and any other references
  • Name and address of the lender company – bank, building society etc
  • Date of the mortgage agreement
  • Amount of the mortgage
  • Address on which the loan is secured
  • Facts that support the allegation that the mortgage was mis-sold

Advisor Errors – Red Flags

There are many reasons for alleging that a mortgage has been mis-sold including :-

  • Failure to give adequate advice upon which an informed decision could be made
  • Did not offer a financial product that was suitable for that particular borrower
  • Advisor did not discuss other methods of finance, other companies or other products.
  • Adviser did not carry out a fact find to establish needs or requirements
  • Failed to follow the Financial Services Authority guidelines
  • Inadequate explanation of fees and charges including the brokers commission
  • Failed to consider the effect of retirement on meeting the payments.
  • New mortgage rather than extend existing mortgage – illicit practice known as ‘churning’
  • Failure to advise full implication of an ‘interest only’ mortgage

Common Traits of Mis-Selling

There are a number of common features with most mis-selling of mortgages. If any of the circumstances below apply to you there is a strong possibility that you were mis-sold your mortgage. If you recognise any of these as applying to you please call us :-

  • Mortgage on an interest only basis
  • Encouraged to self-certify your income
  • Offered only one lender
  • Offered only one financial product
  • If you will be charged fees for being in arrears
  • Purchase using “Right to Buy”
  • Mortgage continuing after retirement
  • Re-mortgage in order to pay off debt
  • New mortgage rather than top up
  • Interest only mortgage
  • Life assurance, mortgage payment protection or other insurance agreed at the same time

Main Categories of Mis-Sold Mortgages

There are four main grounds upon which a claim for mortgage mis-selling can be based. It must also be proved that the person who sold the policy was in breach of the regulations at that time and effectively failed to give the customer sufficient information on which the client could base the decision to enter into the loan agreement. The four main categories of a mis-sold mortgage are as follows :-

 Mortgage Suitability :-

A financial adviser involved in the sale of the mortgage should have ensured that the loan was suitable for your needs and that you fully understood all of the terms and conditions. Your advisor should have discussed any other available methods of borrowing or financing the purchase of your property. If you advisor failed in any of these respects then you may have a been mis-sold your mortgage.

 Mortgage Churning :-

This really is the most unpleasant tactic in the realms of mortgage mis-selling employed by some financial advisors whereby they advised clients to pay off an old mortgage and take out an entirely new mortgage. The only person to gain from this would be the advisor who would receive an enhanced commission payment when compared with the smaller commission obtained on an original mortgage top up. The client on the other hand will have suffered a substantial loss due to the effective financial penalty for cashing a mortgage in early. This practice is a manipulation of the client’s assets in favour of the financial advisor and is against The Financial Services Authority rules.<

 Regulatory Failure :-

Financial advisors are required to abide by the Financial Services Authority rules and failure to explain fees, charges and values or failure to complete a fact-find may mean that you have a claim. For dealings after 1 January 1995 you should have been given a Key Features document detailing fees and charges.

 Retirement Difficulties :-

Mortgages that continue into retirement cause particular difficulties as the borrower has to continue to pay even on a reduced retirement income. The financial advisor should have ensured that you would have sufficient funds to pay the mortgage interest and the insurance premiums after you had retired. If this subject was not broached then you have a potential claim. Interest only mortgages are causing particular concern in this category.

Financial Ombudsman Service

If the company makes no offer to settle the mortgage mis-selling claim then application to consider the matter is made to the Financial Ombudsman Service and in addition a summons claiming damages can be issued in a court of law :-

  • Financial Ombudsman Service
  • Exchange Tower
  • London E14 9SR
  • United Kingdom
  • Tel: 020 7964 1000
  • Fax:020 7964 1001

For More Information Visit: UK probate lawyers

Leave a Reply

Your email address will not be published. Required fields are marked *