Mis Sold Mortgages
Were you advised to take a Mortgage on your property which you think may not have been suitable for you? The professionals involved with the sale, that's the banks and financial advisors could have mis
sold you the mortgage you applied for. Massive commissions and incentives were made available to anyone involved with the sale of these products, and widespread Mortgaged mis selling was not un common.
We are reputable law firm who deal with many types of mis sold financial products. We can assess your case and if a mis sale has taken place get you a refund of the money you are due.
Our audit fee is £299.00. However we will only take your case if it matches our criteria, because not all mortgages are eligible. Watch out for those companies who accept any case and just take
your money. As a law practice we have a duty of care to our clients that we have to abide to and protects you the customer.
If you have a fixed mortgage, second mortgage, a bad credit mortgage, right to buy or buy to let we can try and help.
Ultimate Law will have your mortgage audited for any mistakes or breaches and if possible go on to recommend the best route to get you the compensation that you are due.
Stephen Bland of the Financial Services Authority: "We found some willing to offer mortgages they know to be unaffordable and to accept self cert business even when they had concerns that the financial
information provided by the customer was implausible. These practices are completely inconsistent with treating customers fairly."
The Financial Services Authority, a body who regulate advisors, publish rules which need to be adhered to, often many firms ignored the rules.
Thousands of ordinary people, like you, have been potentially mis sold mortgages by commission based brokers. Call us for a free initial conversation on how we may be able to help you.
Mis Sold Mortgages Questions
Click onto the questions for the answers.
1. Which Mortgages are affected ?
ONLY FSA REGULATED MORTGAGES OR MORTGAGES ADVISED DIRECT FROM A BANK OR BUILDING SOCIETY
Since 31st October 2004, all Regulated Mortgage Contracts have been regulated by the FSA. This means ;
The Borrower was an individual or a Trustee. The mortgage is secured by a first legal charge over the property in the UK where more than 40% of the property is used by the Borrower or a relative.
In the case of a Trustee, this must apply to a beneficiary of the Trust or a relative.
Before 31st October 2004, we can challenge first charge residential mortgages direct from banks and building societies using Banking Ombudsman regulations back to 1991.
All other types of mortgage such as Commercial, Buy To Let, Investment Property or Additional Secured Loans are not Regulated.
2. What are the Rules for Mortgage Selling and Management ?
When taking over regulation of Regulated Mortgage Contracts in October 2004, the FSA introduced the Mortgage Conduct of Business rules (MCOB). MCOB is a set of clearly defined rules set out in 13 Sections
covering all aspects of the Mortgage process from initial advertising and promotion, through the whole client sales process to also dealing with clients that get into arrears and face repossession.
All Lenders and Brokers involved in any aspect of the Mortgage Sales and Management Process must follow MCOB rules.
3. Why must Lenders and Brokers follow MCOB so what if they do not ?
The Financial Services Authority is a government appointed regulator for all regulated financial services but they do not have the power to determine the Law of the Land which is done by government
via the legislative process. So why is it such a big deal if a lender or broker breaks FSA rules ??
The Financial Services and Markets Act 2000 (FSMA 2000) was enacted by Parliament to bring in new levels of protection and standards for UK Investors and Institutions. This is law which all financial
institutions must obey or be guilty of committing an illegal act which is prosecutable through the courts.
FSMA 2000 gives the FSA the power to determine what rules should be followed by Authorised persons when engaging in certain Regulated Activities such as Regulated Mortgages. The FSA have provided MCOB
as the rules for Regulated Mortgages and if these rules are breached, the person who is responsible for the advice is guilty of an offence that means compensation is payable. So, if any Authorised person
such as a Lender, Mortgage or Financial Adviser has not followed MCOB exactly as prescribed, they are liable to be legally sued for any loss as a result of their negligence or non compliance with MCOB.
It is also an offence to provide advice on a Regulated Product such as a Regulated Mortgage without being Authorised so that unregulated advsers do not escape penalties.
This is very powerful legislation that only supports a financial claim for an FSA Regulated Financial Product like a Regulated Mortgage.
4. What is the Financial Ombudsman Service ?
The Financial Ombudsman Service (FOS) was established by Parliament to act as a FREE independent body to assess financial complaints from Consumers, thus giving them a way of complaining about
Financial Services without having to seek expensive and lengthy legal action via the Court system.
FOS is completely independent and impartial and Consumers do not have to accept any decision it makes. They are always free to go to court instead. However, if they do accept a FOS decision, it is binding
both on them and on the business. Each year FOS deal with almost a million enquiries and settle over 150,000 disputes.
5. What if the Company or Broker do not obey the FOS decision ?
It is the job of the FSA to impose fines and / or strike off Authorised Persons from the register if they do not obey FOS directions. In more serious cases of fraud or breaches to Financial
Codes, the FSA may automatically fine an Authorised Person or Institution even if they do comply with a FOS decision. Clearly these fines are intended to be a deterrent to other offenders who may wish
to commit similar breaches !
6. What if the Company or Broker cannot pay a fine ?
All Regulated Financial Companies and Brokers should have professional indemnity insurance which will pay for certain eventualities if a fine or compensation order is levied against them.
7. What if the Company or Broker does not have Professional Indemnity Insurance or has gone out of business ?
The Financial Services Compensation Scheme (FSCS) is the compensation fund of last resort for customers of authorised financial services firms. If a firm becomes insolvent or ceases trading
it will be able to pay the prescribed compensation to its customers. A Mis-Sold Mortgage Claim would receive the benefit of a maximum £50,000 per person cover from the FSCS.
8. What exactly are MCOB Rules in terms that I can understand ?
MCOB is largely based on common sense of what would be considered to be a fair and reasonable way to promote and maintain a complicated financial product to a non financially trained consumer.
Generally if it sounds unfair to a reasonable person then it will probably be a breach of MCOB !!
9. Who has been fined : what examples are there of FSA and FOS action ?
1. Mortgage lender GMAC-RFC fined £2.8m by FSA for unfair treatment of borrowers in arrears.
Around 46,000 mortgage customers of GMAC-RFC will also be paid a total of £7.7m in redress following an investigation by the Financial Services Authority.
2. FSA fines two mortgage firms almost £100,000. The Financial Services Authority's crackdown on unsuitable mortgage advice rolls on with a fine of almost £100,000 for two firms.
The financial watchdog fined two directors at Abbey Mortgages Limited £30,000 each for putting vulnerable customers at risk and leaving the door open to fraud. The FSA said a sweep of self certified
mortgages at the Bexleyheath-based firm revealed directors William John Evans and Gary Howes were not checking the affordability or suitability of mortgages.
3. FSA fines mortgage firm £35,000 for failing to prevent fraud. A Northern Ireland mortgage firm has been fined £35,000 for failures which led to at least 16 fraudulent mortgage applications
being submitted to lenders.
The Financial Services Authority (FSA) found County Down-based Case Funding Centre (CFC) did not have adequate systems and controls in place to counter the risk of customers and staff submitting mortgage
applications based on false income and employment information.
4. FSA fines Thinc Group £900,000 for sub-prime record keeping failings.
The Financial Services Authority (FSA) has fined Thinc Group Limited and two of its group companies (the firm) £900,000 for not having adequate risk management and compliance systems for its sub
prime mortgage business and for failing to take reasonable care to ensure that it had records to prove that advice it gave to customers in relation to the sale of sub prime mortgages was suitable.
5. The Financial Services Authority has fined Nottingham mortgage broking firm Gillen Farrelly Independent Advisers £17,500 for failing to ensure it provided suitable advice, which exposed over
80 customers to the risk of being sold an unsuitable self-certified mortgage.
The case arose from a number of visits to the firm, including one in August 2007 that was part of an FSA thematic project looking at the sale of self-certified mortgages.
Between January 2006 and April 2008 the firm failed to:
- 1. Make appropriate enquiries about customers' income, expenditure, credit history and debt position, so that it could properly assess the affordability of its recommendations
- 2. Record from customers sufficient personal and financial information about them to demonstrate the suitability and reasons for its recommendations
- 3. Conduct adequate due diligence in respect of a third party introducer and failed to carry out straightforward checks which would have enabled it to assess the accuracy of information
provided by customers referred by that introducer. This increased the risk of the firm being used by third parties to commit financial crime.
6. Mortgage mis-selling case could impact on repossession The Guardian has reported on a case in which the Financial Ombudsman Service (FOS) has ruled that a previous homeowner, whose property
has been repossessed by their lender, was mis-sold their mortgage in the first place.
According to the newspaper, the ruling could set a precedent that would prevent repossession where it can be shown that a mortgage has been mis-sold.
The case hinged on rules covering "suitable advice" for borrowers contained in the Financial Services Authority's handbook for mortgage advisers.
7. Key repossession ruling opens door to mortgage mis-selling complaints.
"The Ombudsman's verdict offers hope for homeowners who are battling to keep a roof over their heads. A remarkable ombudsman victory for a householder who had his home repossessed after being mis-sold
a hefty mortgage could set a precedent, preventing others from losing their properties as the recession bites, lawyers say. "
10. So who are we targeting for possible mis-selling : is it ALL brokers and Firms ?
NO !
Although the potential for fraud and Mis-selling exists with every type of Regulated Mortgage, even those with the most reputable of High Street lenders, the potential for claims is very small here as
the control mechanisms in place make it very difficult for breaches to occur
We are looking for the types of mortgages that attracted risk taking brokers who were chasing much higher commissions than were available with traditional high street lenders and customers that met normal
lending criteria. Many brokers and firms did not adhere to MCOB when placing their clients into mortgage deals that were totally unsuitable for their circumstances and in most cases would inevitably lead
to repossession.
SOME MAIN EXAMPLES ARE ;
ADVERSE CREDIT MORTGAGES – Aimed at sub-prime clients who already had arrears and CCJ's on their files. Many of these mortgages were promoted by brokers as a method of stopping legal proceedings
to clients already in difficulty. This type of Mortgage offered far higher commissions than standard products to creditworthy borrowers. A £70,000 mortgage could have a £5000 broker fee and
a £5000 lender's arrangement fee – nearly 15% of the original loan. A typical prime mortgage would have a 0.4% commission fee to a broker !! These products also had high early repayment charges
to lock customers into expensive deals that they could not really afford !
SELF CERTIFICATION MORTGAGES – clients who did not have to prove their income. Same as Adverse – very high Commissions and High Early Repayment Charges.
MORTGAGES WITH VERY HIGH LOAN TO VALUE (LTV) – clients who could not put down any deposit or remortgaged their homes to a very high percentage. Some Mortgages were even transacted at 125+% of home
value putting the client immediately into negative equity.
BROKERS CHURNING PRODUCTS – Churning is a common practice by brokers or firms looking to chase commissions and arrangement fees. The client will be placed into a low rate product for a short period
which becomes impossible to pay when the interest rate resets higher after the promotional period which could be just one year. The broker then remortgages the client onto a new low rate product and the
client may charged an early repayment penalty by the lender along with a new arrangement fee – for this the broker also receives another inflated commission.
It is not uncommon to find clients that have been churned 4 or 5 times in as many years. This was made possible by rocketing house prices from 2004 – 2008 but when prices reversed the only possible
outcome for most clients was repossession. No regard by the broker of current or future ability to repay !
11. Can you give me examples of Target Lenders : Sub Prime (Bad Credit) : Self Cert : High Multiple LTV ?
Advantage, Accord, Abacus, Mortgages Plc, Platform, Kensington, Rooftop, GMAC, GE Money, First Plus, Swift, Capstone, Victoria, Unity Homeloans, Infinity Mortgages, Mortgages plc, Preferred, DB Mortgages,
Lehmans, Merril Lynch etc. Northern Rock – Together 125%
12. Can you give me examples of Target Clients ?
Any client ;
• Who had adverse credit when taking out the new mortgage.
• Who was already in financial hardship when taking out the new mortgage and / or was already in default of mortgage payments and facing legal action or repossession.
• Who Self Certed to obtain the mortgage / encouraged to fabricate income..
• Who was on State Benefits when taking the loan.
• Given a low start rate and advised to remortgage when offer period ended.
• Churning – clients repeatedly moved to new low start products with same lender to incur arrangement fees.
• Broker fees were in excess of 1% of the loan.
13. How do I submit cases ?
We will provide you with a short application form and a questionnaire to complete. You can complete our eligibility check and download your claim pack HERE . As a minimum, you will need to
provide;
• 1. Documentation showing the Mortgage Holders Names, the Lender's details and the Mortgage account number.
2. The Mortgage Offer.
• 2. Signed Authority to work on your behalf.
3. Signed Terms of Business.
It will speed the assessment of the case if you also provide;
• A. Solicitor's Completion statement
• B. Mortgage Application – some clients have a copy.
C. Suitability Letter – This is provided by the adviser to justify the recommendation and is often the very document that we use to prove a Mis-Sale !!
14. How much does it cost to submit a case ?
We charge £299 to audit a Mortgage Claim.
15. Any refund to client if there is no claim ?
YES – we offer a refund of £200 if there is no claim. We keep £99 to cover our administrative costs - unfortunately we have to pay our mortgage advisers for auditing your
case and producing the compliance report so we need to keep an administrative fee.
16. What does a client receive to show that you have done an audit ?
Whether the claim proceeds or not, ALL clients will receive an MCOB COMPLIANCE report from a qualified Mortgage Adviser to show any breaches of MCOB that we feel have the merit to proceed
with a complaint. If there is no claim, the client will receive an MCOB COMPLIANCE report stating that we believe all sections of MCOB have been complied with and that there is no case.
17. How long will it take to process a claim and enforce it through FOS or a Solicitor ?
We estimate that a FOS complaint will take 6-9 months to complete and a Solicitor complaint will take 9 – 12 months from initial submission.