Mis-Sold Mortgage Claims

Compensation for mis-sold mortgages

The financial services sector is awash with scandals about the mis-selling of various products, from payment protection insurance policies to investments, pensions and endowment policies. One of the latest scandals to hit the headlines is mortgage mis-selling. This occurs where a mortgage adviser arranges a mortgage in contravention of Financial Services Authority regulations on the advising and selling on mortgage products, resulting in the consumer taking out a mortgage which is unsuitable for their needs.

The development of this area of law stems from a case in 2009 where the claimant was mis-sold a mortgage with a low initial rate which increased substantially after the introductory period had ended. As a result, the claimant was unable to meet his mortgage repayments and his home was repossessed. He complained to the mortgage adviser who sold him the mortgage and when he was unable to resolve the complaint, he brought the case to the Financial Ombudsman Service. The FOS decided that the mortgage adviser had breached the FSA guidelines on selling mortgages and that he was therefore responsible for any loss or damage which the claimant had suffered. The mortgage adviser was ordered to pay £50,000 in compensation, which is the maximum compensation which the FOS can award.

Since the 2009 case mentioned above, the area has not grown substantially and there have been no reports of similar awards being made by the FOS. Partially this is due to the Financial Ombudsman Service expressing doubt as to whether it has the jurisdiction to decide these cases and not wanting to open the floodgates to a huge caseload of claims by making new law in this area. However, this has the potential to be a huge claim area, and if a test case were brought in the County Court, the FOS might be more willing to take a proactive approach.

All about mortgage claims

In recent years, more and more people have concerns on the problems involved with committing to buy a home, and some may be able to make a claim.

An explanation of mortgage rules and regulations

There are specific rules and regulations concerning mortgages that both the mortgage lender and the borrower must necessarily follow.

Find out more about mis-sold PPI

Payment Protection Insurance is an insurance that protects the individual from loss of income and their inability to pay back loans they may have.