Do I have to pay our financial advisor??

banjo2010

I hope I am posting in the right place.

We were recommended by a friend an independent financial advisor who would sort out our house purchase and mortgage.
We have been very unhappy with the service we have received from him and wonder where we stand with paying him.

The problems we have had are as follows;

The mortgages suggested to us were of no use as we did not meet the criteria of them.
Trackers that were suggested to us we were told that the base rate increases would only up our payments by a fraction of what they really would.

The mortgage we did apply for was completed by him impersonating us online because a broker could not be used. He produced a Key facts illustration for us over 37 years for our mortgage but applied over 35 years and on the key illustrations filled in a charge we would pay him.

The mortgage application was filled out incorrectly and caused us issues with the mortgage company. At this time our advisor had gone on holiday without telling us, leaving us to deal with the issues.
When offering for our house we had to do all the work even though he was ment to have been dealing with putting in the offers.

All in all we have had to do near enough everything ourselves. He has sourced some mortgages even though they were inappropiate.

We have not signed any form of paperwork or anything with him agreeing a fee, it was all done verbally and we have not paid anything to him up front.

Do we have to pay him? When all he really has done was pretending to be us online and applying for the mortgage on our behalf?

Many thanks for taking the time to read and any advise.

dunstonh

We were recommended by a friend an independent financial advisor who would sort out our house purchase and mortgage.
We have been very unhappy with the service we have received from him and wonder where we stand with paying him.

Probably better to see a mortgage adviser rather than an IFA. However, its a bit late now. What you have to pay depends on your agreement and how willing you are to risk him to take you to court for non payment.

The mortgages suggested to us were of no use as we did not meet the criteria of them.
Trackers that were suggested to us we were told that the base rate increases would only up our payments by a fraction of what they really would.

Are you saying that they rejected the applications or you just didnt like the deals currently available?

The mortgage we did apply for was completed by him impersonating us online because a broker could not be used. He produced a Key facts illustration for us over 37 years for our mortgage but applied over 35 years and on the key illustrations filled in a charge we would pay him.

That fine and actually its a good thing because it proves the adviser was using true whole of market and not just commission paying deals. There is snag with these though and that is the adviser cannot produce KFIs a lot of the time and has to "create" one.

The mortgage application was filled out incorrectly and caused us issues with the mortgage company. At this time our advisor had gone on holiday without telling us, leaving us to deal with the issues.

What sort of issues and what was wrong?

When offering for our house we had to do all the work even though he was ment to have been dealing with putting in the offers

When the adviser uses a direct provider and not one that transacts through a mortgage adviser, the lender won't recognise the IFA and will send everything through you. Of course, you can contact the adviser if you need help.

All in all we have had to do near enough everything ourselves. He has sourced some mortgages even though they were inappropiate.

How many mortgages did you apply for and why did you apply for the current one if it is not appropriate?

We have not signed any form of paperwork or anything with him agreeing a fee, it was all done verbally and we have not paid anything to him up front.

What about the key features illustration that shows the fee?

When all he really has done was pretending to be us online and applying for the mortgage on our behalf?

Whats wrong with that? You should be happy that he was using the independent full whole of market method and considering non commission paying deals.

Do we have to pay him?

Subject to clarification on what the issues were, then yes.

banjo2010

Thanks for taking the time to reply. Hopefully i have answered the questions correctly.

dunstonh wrote: »

Are you saying that they rejected the applications or you just didnt like the deals currently available?

They were deals where we had to be account holders or have family members who were members.

dunstonh wrote: »

What sort of issues and what was wrong?

He incorrectly filled out our previous addresses and never informed us of us having to make an application payment within 3 days so a week went past and the application had stopped. After a few calls they reinstated the application and I had to type a lengthly letter and provide 9 forms of proof with different dates showing where we were living at certain times. He had put we had lived at home all the time.

dunstonh wrote: »

How many mortgages did you apply for and why did you apply for the current one if it is not appropriate?

We applied for one in the end (well our advisor applied for it impersonating us for us) and it was agreed it would be done over 37 years but he applied over 35 years thus increasing payments which we hadnt budgetted for.

dunstonh wrote: »

What about the key features illustration that shows the fee?

We have not signed anything. Our advisor created the key facts which was emailed to us. A friend says advisors can not charge for applying for mortgages in our name by impersonating us online. How truthful this is i dont know.

With us actually not signing any paperwork are we legally obliged to part with any money?

thanks again

dunstonh

We applied for one in the end (well our advisor applied for it impersonating us for us) and it was agreed it would be done over 37 years but he applied over 35 years thus increasing payments which we hadnt budgetted for.

To be honest, the difference between 35 and 37 years is unlikely to be much. However, the reason for that is that some of the online submission systems dont allow terms over 35 years. I seem recall C&G for example. A manual change afterwards is possible though.

A friend says advisors can not charge for applying for mortgages in our name by impersonating us online. How truthful this is i dont know.

Your friend is wrong. Agents acting on your behalf can input data and submit. You would have got a paper copy of what you applied for sent to you and a request to sign the contract. Those are the legal bits. Not the online submission.

With us actually not signing any paperwork are we legally obliged to part with any money?

You dont need to sign anything. It certainly makes it more concrete in court if you do. However, if the charges are shown on their terms of business and on the key features illustration then that would suffice.

Given the address issues you could request a reduction in the fee for inconvenience. Maybe £25-£50 off the bill. However, its quite possible that evidence of addresses would have been required anyway if you have quite a few over the last 3 years. Especially if the electronic verification system cant find you.

smallfry27

I might end up with a similar problem. I went to a new IFA, his key facts offered both the commission route or the hourly fee route. I don't think we ever formally agreed which route to go, but he said most people opt for the commission route. He has now made a proposal on some new investments, none of which I wish to take up, and I won't be doing other business with him. I'm assuming that as he preferred the commission route I won't owe him anything. Foolishly I signed his terms of business letter but didn't get a copy for myself. But as far as I remember it didn't commit me to anything much. If the worst happens I guess he might charge me for his research time, which morally I can't argue with.

dunstonh

It depends on what the guide to services document says. However, typically, the fee option is the only one where you will incur fees for work done even if you dont proceed. Commission option doesn't unless explicitly told otherwise or you are using commission offset to pay the fees (increasingly common). However, again with that option you would be told the point fees start to be incurred.

smallfry27

It has been a while since my previous post on this thread, the situation is that I thought I was consulting an IFA under his commission option, but now that I am not taking up his proposal, he wants to charge me a fee.

I have told him that he cannot impose a charge he did not disclose to me at our first meeting, but he is adamant.

Is there a formal source which describes normal practice in regard to commission? It's very good to have advice from others but I think I need something fairly formal that I can show him.

I have read all the FSA, Directgov, Moneymadeclear advice about making a complaint, but it sounds a long process.

dunstonh

I have told him that he cannot impose a charge he did not disclose to me at our first meeting, but he is adamant.

He cannot charge you a fee if it was not disclosed on the terms of business letter/guide to their services. That is the formal document you should look at.

When being charged a fee, we are always told to get a fee agreement as the chances are the small claims court will not rule in favour of the adviser without an agreement being in place and signed by you.

This is no different to any other contract in any other area of business.

All you need to do is look at the terms of business/guide to services and ask him for a copy of the fee agreement. If he cant supply the fee agreement then he can huff and puff and threaten all he likes. Without it there is no proof you have to pay anything.

banjo2010

I have not heard from the FSA who I dealt with now for nearly 4 weeks. I have never had a business letter/guide to his services. I have the money to pay him if i have to in an account. How long should I give it for him to get in contact?
Thanks

dunstonh

If you have not been notified of the charges and not had a fee agreement then why do you want to pay?

BTW, FSA = Financial services authority (or food standards agency )

smallfry27

Hi Banjo, I'm not clear how you got from your post #3 to dealing with FSA. The FSA do not usually get involved with specific complaints, but can give general guidance.

Do you mean that you made a formal written complaint to your IFA ? If so they have eight weeks to reply to you.

Or have you verbally told the IFA you are unhappy, and are just waiting to see if he will still send you an invoice ? I don't know if there is a time limit on that. I can see you want to know where you stand, but there is also the possibility that an enquiry will remind them they haven't sent the invoice (that's a posh version of saying let sleeping dogs lie).

Although my problem is slightly different, the FSA consumer help line recommended that if I cannot resolve problem verbally, I should pay the invoice (so I don't end up liable for a debt or with a bad credit record), but then submit a formal complaint. Hopefully the IFA will then refund, or if not, I can go to Financial Ombudsman. A long haul.