FSA Mortgage Rules and Mis-Selling

Mis-sold mortgage claims and the FSA

Enforcing mortgage rules

The FSA is responsible for enforcing its own rules and if it appears to it that a mortgage adviser is consistently disregarding the rules then it may take action, fining the person concerned or suspending his licence to operate. However, this is of little use to the consumer who has suffered financial damage as a result.

Section 150 of the Financial Services and Markets Act 2000 states that any breach of an FSA rule is “actionable at the suit of a private person who suffers loss as a result” and this applies to the rules contained in MCOB. This means that any time a mortgage adviser sells a mortgage which is unsuitable, the consumer is entitled to make a claim against the adviser, either in the County Court of through the Financial Ombudsman Service.

The role of the Financial Ombudsman Service

Whilst the FSA is responsible for enforcing the rules, it does not deal with or investigate individual consumer complaints. Instead these are dealt with on behalf of the FSA by the Financial Ombudsman Service (or FOS). The purpose of the FOS is to investigate consumer complaints and try to negotiate a resolution to that complaint between the consumer and the financial services provider. If a resolution is not possible, an adjudicator will be allocated to the case who will investigate the complaint and will either dismiss it or order the bank to provide restitution.

Under the FSA’s dispute resolution rules, financial services providers are required to submit to the jurisdiction of the FOS, to co-operate with its investigations and to comply with any orders which it makes. The FSA takes breach of these rules very seriously and if a financial services provider fails to co-operate with the FOS then it can be fined or have its authorisation to trade suspended.