Mortgage broker loses misselling case!

Conrad

HelpwhereIcan

Stirling work with those links and so fourth.

I changed from advice to information only for the reasons highlighted by this very case.
I carry out a detailed factfind and ask the client to complete and sign a budget planner, and they also sign every page of the factfind in which there are standard statements about the risks of rate rises, but I still felt a cunning client and Lawyer might find a way to get me, and render my familys future bleak. Sure we have insurance but I'm of the opinion much of the time claims will be voided by insurers.

I've seen how cunnning and greedy clients can be, for example one family where the whole lot of them had claimed for work related injuries and won and lived off benefits, whilst working on the side. These people have no morals and would drop up a broker in it at the drop of a hat. Sure, we can keep detailed records - but will they be sufficient - you just don't know.

I wonder why others don't switch to information only. Sure, that doesn't guarantee against litigation, but surely it makes one a little safer.

I know a very reliable honest IFA that picked up a £60,000 fine recently and he really was entirely innocent of foul play. He had bought the clients of another IFA and ended up with a pensions miselling case against him.

Conrad

BTW, the greatest worry for 'advised' basis sales, is the line in the illustration that makes it clear the broker recommends a mortgage is a suitable course of action. There are just so many ways a compensation hungry client could exploit this. Makes me shivver

HelpWhereIcan

Conrad wrote: »

I know a very reliable honest IFA that picked up a £60,000 fine recently and he really was entirely innocent of foul play. He had bought the clients of another IFA and ended up with a pensions miselling case against him.

I have recently taken on the clients of a retiring IFA and the above is exactly why I ended up paying a solicitor to draw up the agreement.

Under the sale agreement I have taken non of the liabilities and, just in case someone finds a hole in the wording I also have an agreement with him where he personally (he was Ltd Co) indemnifies my company against any clawbacks, claims or complaints. That way I have some protection - at least financially.

Roll on the 15 year longstop!

dunstonh

I know a very reliable honest IFA that picked up a £60,000 fine recently and he really was entirely innocent of foul play. He had bought the clients of another IFA and ended up with a pensions miselling case against him.

You can buy the clients without buying the liability. Bit late now for this person and a bit of an expensive lesson.

Roll on the 15 year longstop!

You mean the FSA would allow us to have equal protection of that in law? bah, dont be silly.

HelpWhereIcan

macaque wrote: »

Endorsement from the FSA is not exactly encouraging given their record.

But the MCOB rules you (and the Guardian) were quoting were the FSA's Mortgage Conduct Of Business rules. You either want complaints to be made and assessed under them or you don't.

macaque wrote: »

If a mortgage adviser knowingly withholds information about better deals from customers, that is a form of misselling. Someone should put this to the test.

A test case under the law would require a greater level of evidence of wrongdoing than the FOS requires.

The FOS has the mandate to determine a case based on probabilities. A court of law requires firm evidence of wrongdoing. This means that a complaint has a greater chance of success through the FOS than the courts.

A whole of market broker will, as the FSA's rules suggest, make a client aware that

there are certain deals only available direct from lenders; and that if the customer want to investigate that sector of the market for themselves they may find more competitive products.

However, the lenders will generally not provide intermediaries with the information required by the MCOB rules to support a reccomendation.

I would like to be able to advise my customers to apply for a direct product if I think this is the best option for them but because I cannot obtain a KFI I cannot do this. Is there anyway around this?

The requirement to provide consumers with a KFI has always been a central part of the mortgage regime, and advisers have always needed to ensure they have sufficient information about a product's features to be able to produce a KFI before they recommend it. We think that a recommendation without an illustration of what is being recommended will be of limited value to the customer. Also, if an adviser does not have full details of the product and how it will function, we would question how they can be satisfied it will be suitable for the customer.

However, we are aware that some systems provide details of direct to lender products and will also provide direct KFIs. Therefore, it may be possible in some cases for intermediaries to recommend products which are only available directly from the lender.

Intermediaries producing KFIs for direct products remain fully responsible for ensuring their KFI is accurate (within the given tolerances) and so if using a third party system need to be assured of its accuracy.

So the situation is not as simplistic as you seem to think and the fact that this guidance has been given following enquiries from advisers show that advisers are just as frustrated with the way things are.

Most would be happy to give advice on direct deals on payment of a fee, but regulation (that is there to protect the client) makes that a difficult thing to do without the lenders' co-operation and the FSA are not willing to force lenders to 'play ball'

Why isn't the FSA doing more to stop lenders from offering differentially priced products?

Lenders are not obliged to deal through intermediaries. How lenders choose to price and distribute their products is a commercial matter and, contrary to some claims, lenders are not in breach of FSA rules if they choose to go down this route

Your anger on this issue is aimed at the wrong people and using a tenuous link between a poor bit of research and case of mis-selling based on a different issue to try and encourage complaints against advisers is, at best, spurious and, at worst, downright malicious.

Either way, your argument is based on a mis-understanding of the law, regulation and which institution is really out to screw the customer.

I'll give you a hint ... It's not brokers that are using regulation under the guise of commercial interest to restrict access to some deals so that the public's access to advice is restricted by forcing them into the hands of information only services or tied sales reps.

Ask most advisers whether they would rather charge a fee and never receive commission again - most will reply "Yes, I'll get paid for the work I actually do."

Ask most customers about how they should pay for genuinely independent advice and a depressing number will still expect the advice for "free" but still accuse advisers of being commission hungry salesmen who should share that commission with them.

I wonder where you fall? Until you are willing to pay for a service like the one you set as the standard you will either have to accept the situation as it is or do what you can to ensure that the FSA etc make sure that lenders don't put obstacles in the way of advisers looking to give advice on all deals.

HelpWhereIcan

dunstonh wrote: »

You mean the FSA would allow us to have equal protection of that in law? bah, dont be silly.

I know, I remember having the conversation with my wife:

"what do you mean you have a lifetime liability for the advice you give?"

"Well, if we retire in 15 years and someone decides to complain and get compensation in 20 years' time for advice I give today I'll have to address that complaint and pay any compensation that's due"

"What, even if it happened 20 years before and the market and regulation changes over that time and the problem was one you could not have forseen?"

"Yes"

"Just as well you're a Ltd Co then. They can't come after your personally then. The Company will have to pay or go bust"

"They can"

"What the ...! Why?"

"Well I have given an unlimited personal guarantee to the network and they will come to me if the company is unable to pay"

"So we could lose everything years after you have sold the business even if you follow the rules?"

"Yes"

"Is it the same for the likes of Solicitors, Accountants etc?"

"No"

"Would that be the same if you worked for a bank flogging their products for them?"

"No"

"So why aren't you working for a bank (and don't give me any of that independent Shiite)"

"erm ..."

Dan_1976

This will go on forever, the broker haters will be in heaven!

The first article raisies some very good points, although I am pretty sure he did not look at the cost after the nice discount went away.

The 2nd will just start a witch hunt. Brokers work within FSA rules. Until they change them brokers do not have to tell people about other deals.

I agree the terms the FSA made up when they took over mortgage regs are misleading and a pain in the bum.

Its not misselling, advice covers the types of mortgage available not always the lender and rate. I may of recommended a fixed rate for 5 years, thats the advice. If they took a five year deal even though they told me they would sell up in two years to move to oz, then I miss sold. If they come back and say you did not tell me about direct lines 5 year fixed no rules were broken!

macaque_2

HelpWhereIcan wrote: »

I know, I remember having the conversation with my wife:

"what do you mean you have a lifetime liability for the advice you give?"

"Well, if we retire in 15 years and someone decides to complain and get compensation in 20 years' time for advice I give today I'll have to address that complaint and pay any compensation that's due"

"What, even if it happened 20 years before and the market and regulation changes over that time and the problem was one you could not have forseen?"

If you've done nothing wrong, you have nothing to fear.

Dan_1976

Problem is, you may not think its wrong at the time! Equity release seems great but I bet in a few years people will be hung out to dry!

dunstonh

If you've done nothing wrong, you have nothing to fear.

Biggest concern of many is fraudulent complaints. They are increasing significantly.