Getting the right mortgage for your circumstances is not a decision to be taken lightly, as it can make or break your financial situation.
To make this somewhat daunting process easier, the Financial Conduct Authority (FCA) provides mortgage lenders and advisors with guidelines detailing the advice they should share with people interested in mortgages.
Whilst the experience of most people during this process is a positive one, sadly, there are some lenders, advisors, and brokers who have failed to adhere to these guidelines. They neglected to give appropriate advice to their clients, resulting in an inability to afford the mortgages they were recommended.
Who Can Claim Compensation For A Mis-sold Mortgage?
The key steps you need to take before you can claim and answer the most common questions people have when it comes to mis-sold mortgages.
What Is A Mis-sold Mortgage?
In simple terms, this means you were given unsuitable advice and inadequate information, which led to you signing up for a mortgage plan that was not the best fit for you. Who Can Make A Compensation Claim For Mis-sold Mortgage?
To be eligible to file a compensation claim for a mis-sold mortgage, you must have experienced one of the following and been told by your mortgage lender/broker/financial advisor to do the following:
- To switch lenders without being informed about the fees or early redemption fines involved
- To take out a loan or borrow money without showing proof of your income (the affordability check)
- To change mortgage plans without any information been given about the commission payments the lender will pay to your advisor
- To take out a mortgage that ends after your retirement date
- To agree to an interest-only mortgage without any due diligence from your advisor to check how the capital will be funded/repaid at the end of the mortgage term.This could lead to significant debt if the risks were not adequately explained
How Do I Know If I Have Been A Victim Of Mortgage Mis-selling?
Your mortgage lender might have mis-sold your mortgage to you if they did the following:
- Failed to diligently assess both your personal and financial situations at the time
- Neglected to give you a personalised recommendation that suited your circumstances
- Did not give you adequate information about the different options you had access to
What Are The Common Problems That Are Caused By Mis-sold Mortgage?
For most victims of mortgage mis-selling, the common issues they experience because of it are:
- High fees (which could be commission fees, or fees associated with starting or swapping the loan)
- Inappropriate interest rates
- Difficulty with paying the mortgage
- Being left with a large unexpected debt if the risks of interest-only mortgages were not explained
- Negative equity
What Should I Do To Claim For Compensation Over A Mis-sold Mortgage?
If the above scenarios sound familiar, and you wish to pursue compensation, the key actions you should take are:
Raise A Complaint
You will first have to put your mortgage provider on notice that you are seeking compensation for a mis-sold mortgage. This step entails contacting the company and submitting an official complaint to them.
In your complaint, describe the problem in clear and unambiguous terms. Write down how the issue started, what happened on the day you signed the mortgage, and the advice (or lack of) you received from the person arranging your loan.
You should also include how you want the company to resolve the issue.To lend further credibility to your complaint, attach a copy of your statement of accounts, receipts, signed forms, and similar documents to prove that the mis-selling occurred.
After this, the company will get in touch with you so the issue can be managed. During your communication with the firm, ensure you save all correspondence that is exchanged between you and them. So, if it turns out that you are not pleased with the company’s solution and want to get further redress, this correspondence will help in the next step.
Please Note: that the company has eight weeks, from the day they received your complaint, to reply to you. If they do not contact you within those eight weeks or they have and you are not happy with the offered solution, then you can escalate your complaint to the ombudsman.
Contact The Ombudsman
When your complaint gets to the Financial Ombudsman Service (FOS), a mediator will be appointed to assess your case.This mediator will go through information from both sides to arrive at a fair decision. There will be no need for you to pay for this assessment because the services of the ombudsman are free and independent.
As soon as the mediator arrives at a decision, your mortgage provider is legally obligated to agree and follow through with the implementation of their decision. If you are satisfied with the outcome, your compensation claim would end there.
But, if you are still displeased with the decision, then you can head to court. However, seek legal advice before going to the courts because the process can be time-consuming and expensive.
How Much Should I Expect As Compensation?
It is impossible to give you an exact compensation amount because all mis-sold mortgage cases are each determined on their own merits. This means every case is seen as unique and judged as such. In any case, the compensation amount you will receive is aimed at putting you in the exact position you would have been in had you not been a victim of mortgage mis-selling.In clearer terms, your compensation will be determined by comparing your present financial situation against what it would have been if you had not been mis-sold the mortgage.
Should I File For Compensation Myself Or Use A Claims Management Company?
Starting a claim yourself is fairly simple, as per the steps we have outlined in this guide. But, if you decide to use a Claims Management Company (CMC) instead, be aware that their fees are often between 30% – 40% of your final compensation amount. Note: CMC’s are different from claims solicitors because they do not manage the claim themselves.
There Is Another Option You Can Take…
If you do not want to carry out this process yourself and prefer to have some legal backing and assistance in making your mortgage mis-selling claim, you could speak to an experienced claims solicitor. You can arrange this through our site if you wish, and have a free, no-obligation chat with a claims advisor at a time to suit you.
How Long Will My Claim Take?
The average duration for a mis-sold mortgage claim is about 12 months, but this depends on how complex the case is and could be longer.
Is There A Time Limit For Filing A Mis-sold Mortgage Claim?
Yes, there is. You are only allowed to file a claim if the mis-selling of the mortgage happened within the last six years. This six year limit starts from the date you signed up for the mis-sold mortgage. Unfortunately, if the mis-sold mortgage happened over six years ago, you are most likely ineligible to make a claim for compensation.
However, if you can prove, beyond all reasonable doubt, that you were only made aware of the mis-selling during the last three years, then you may be able to file a compensation claim. In these circumstances, we suggested seeking some legal advice.
Will My Mortgage Be Affected If I File For Compensation For A Mis-sold Mortgage?
Absolutely not! Your mortgage provider is obligated to treat you reasonably and fairly. If you feel that you have been unfairly treated by them, the law makes it possible for you to seek compensation. Besides, in a bid to resolve your grievance, your lender might offer you a better mortgage deal.
Can I File For Compensation If My Mortgage Has Been In Arrears?
You are entitled to claim compensation even if you have arrears on your mortgage. Moreover, the arrears could in fact indicate that you were unable to afford the lending at the time you signed up for the mortgage.
Can I Still Make A Claim If My Mortgage Broker Has Gone Out Of Business?
If the company responsible for the mis-sold mortgage is no longer in operation, you could still file a claim against the Financial Services Compensation Scheme (FSCS). However, you first need to be sure that the bankrupt firm was authorized by the FCA before filing against the FSCS.
I Am No Longer The Owner Of The Mortgaged Property – Can I Still File A Claim?
Yes. You don’t have to be the current owner of a mis-sold mortgage to file a claim. As long as you can prove that you had to downsize because of your inability to afford the mortgage fees or your property was repossessed for the same reason, then you may be eligible to claim for compensation.
I Had A Joint Mortgage Account With My Partner And I Am Now Divorced – Am I Eligible To File For Compensation?
Yes, you are still entitled to seek compensation. Your eligibility is not dependent on if you are now divorced from your partner or no longer living with them. In the event that you are awarded compensation, it will be divided between both of you.
Mis-sold Mortgages – To Sum Up
Your mortgage is probably the biggest loan you will ever take out in your lifetime. Making sure you receive the right and proper advice, to suit your personal and financial circumstances, is of paramount importance.
So, it is not right if you are subsequently saddled with an unaffordable or unsuitable mortgage, just because your lender, broker or financial adviser failed in their duty or broke the rules. If this has happened to you and you are a victim of a mis-sold mortgage, we hope the information provided in this article can help you get the compensation you deserve.
