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Original poster

Mortgage broker recommended the wrong mortgage

12 replies

melpomene · 23/05/2008 20:08

Our fixed rate mortgage is about to expire, so in mid-April we visited a mortgage broker who recommended a couple of deals to us. The broker is attached to the estate agent where we bought our house; he set up our current mortgage and had all the details of our current mortgage on his computer system. We chose a deal with C&G (one of the 2 that he recommended), the broker explained the fees and I specifically asked him for reassurance that there wouldn't be any additional fees; he said that was correct. We agreed to arrange for the re-mortgage to happen as soon as possible after our initial fixed rate deal expired.

The paperwork came through from C&G's solicitors; we paid them a £1000 fee, completed a form, and then a mortgage loan agreement. Everything seemed to be in order. Then today I receive an email from the solicitors saying that actually we can't have the mortgage we applied for, because that deal runs out on 30 June and our fixed rate finishes at midnight on that day. So we are now stuck with the prospect of either paying a £1900 early redemption fee, or having to find another remortgage deal, possibly much more expensive because rates have been going up, and also a delay and having to pay the full variable rate to our current lender for an extra month or two while we sort out this mess.

So, does anyone know where we stand? Am I right in thinking the broker has a duty of care and should be liable if we lose money because he recommended a mortgage that would no longer be available at the date when we need it?

OP posts:

ruddynorah · 23/05/2008 20:11

have you got a sales summary or key facts pack from him? it normally outlines how he came to the decision that these were the best choices for you.

Original poster

melpomene · 23/05/2008 20:25

We have a key facts document which does actually say that he is "not recommending" that particular mortgage, although it was one of 2 or 3 that he singled out during our meeting as being the best deals for us. It doesn't seem to say anything about the deal not being available after 30 June, or about having to pay the early redemption fee on our current mortgage. When we saw our broker he said that he was going to look for deals that were available when our current fixed period expired.

OP posts:

ruddynorah · 23/05/2008 20:29

ok. there's 3 types of service you can get.

execution only. meaning you tell him you want x mortgage, and he processes your app for you.

informed choice only. meaning he tells all about lots of mortgages and you pick whih you want.

advice and recommendation. you tell hime what sort thing you're after and he picks what he he thinks is the best one, or two ish for you.

sounds like you've had option 2. where you actually asked whih of the 3 you wanted?

Chipstick · 23/05/2008 20:35

Are you coming off a particularly good fixed rate? If so, go to HSBC where they are currently running a rate matcher campaign. They will match the rate you are coming off of. Depending on the rate/amount something like 70% of applicants are below a £999 booking fee. You do not need to bank with them either.

Original poster

melpomene · 23/05/2008 20:36

We weren't asked which of the 3 we wanted. Even if he didn't technically recommend that mortgage, he gave us incorrect information about it because he said it would be available without having to pay our early redemption fee. (I specifically asked if any other fees would be payable and he didn't mention the early redemption fee). And we relied on that incorrect information in making our decision.

OP posts:

Original poster

melpomene · 23/05/2008 20:37

We looked at the HSBC one, but I think that was only 2 years' fixed rate and we wanted 5 years.

OP posts:

ruddynorah · 23/05/2008 20:43

you need to go through your paperwork with a fine tooth comb. 2 problems, first being that he didn't ask which of the 3 services you wanted. this is the most basic part of mortgage sales compliance. is there no paperwork to show him asking you this?

secondly, are you certain nothing states when the new rate expires?

Original poster

melpomene · 23/05/2008 21:01

Am pretty sure that he didn't ask which of the 3 services we wanted.

The paperwork does state that the fixed rate on the new deal will end on 30 June 2013, but we thought it could still start on 1 July. Also the letter we got from the lender's solicitors (after we'd already paid the arrangement fee) said "this must be completed by 30 June", but at the time I thought that simply meant we had to have completed our documents and have forms and evidence etc in place, not that the mortgage would need to start be that date.

OP posts:

Original poster

melpomene · 23/05/2008 21:07

I have to go now and have a drink with dh to console ourselves.

Thanks for the advice. If you're still there ruddynorah, what should be our next step? Should we go to a different mortgage broker and start from scratch? Is it worth seeing a solicitor/pursuing the broker under small claims?

OP posts:

ruddynorah · 24/05/2008 09:58

i would write to the broker's boss and outline your conerns, explaining that you will take it further as you feel you may have been misold. they may make amends anyway as a gesture of goodwill.

then, if the paperwork really isn't upto scratch, as in there being nothing to show what level of service you were given, then complain to the ombudsman.

if you have signed something saying you were happy with level 2, then it's kind of on your head be it, as the paperwork does state that completion must be by end june. unfortunatley you didn't understand that that meant mortgage completion not paperwork completion.

if you move elsewhere you will lose the £1000 fee, was that mortgage arrangement fee? and will just start all over again, paying another fee no doubt. this, you will have to weigh up with paying an early settlement fee.

hth.

gem1981 · 27/05/2008 10:03

Hi melpomene

Dh and I are in a similar situation we had a mortgage advisor who recommended a mortgage that was highly unsuitable and we had to shell out £4000.00 on redemption.

Chekc out all of you key fact illustrations and see if they sent you a letter called something like "letter of mortgage suitablity"

We have now taken it to the FSA but had to pay the £4000.00 to complete the mortgage deal when we switched in December and we are still awaiting the FSAs decision.

Agree with Ruddynorah about writing a letter of complaint and asking for a gesture of goodwill - the FSA require you to do this before you go to them anyway

let me know how you get on.

hopefully · 27/05/2008 14:33

Definitely write to the broker's company and state that you are looking into a mis selling claim (the words will strike fear into the heart of most brokers), and that you are aware that the broker should not have shortlisted ANY mortgage that would have resulted in an early repayment charge, unless it was cheaper than the competition EVEN WITH the early repayment charge (which I doubt).

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