Rogue Mortgage Broker

Occident

By a process of elimination, it is now clear the firm was the sole trader and the adviser who brokered my friend's mortgage worked for her. So it now comes down to her assets I doubt she will have run-on insurance. I wonder what assets the FSCS looks at? There seems to be mixed messages on the web. Some say if the sole trader doesn't reply to the FSCS, he/she can avoid a claim. Some say that the FSCS will default a sole trader then claw back what is possible afterwards. Some say the FSCS take a sole trader's property into consideration. Some say there are other ways for a sole trader to avoid a claim but don't say what they are. Ideally it would be in my friend's interest if she were declared in default but there is property, albeit with two mortgages on it (my friend got an extract from the Land Registry). There simply isn't much information about the FSCS declaring sole traders in default. Does anyone have any information about this from knowledge and experience? Thank you.

Occident

Were now 4 months down the line and counting. I feel if the sole trader had assets and my friend was expected to sue she would have heard about it by now.
I notice on the FSCS's annual report that most home finance claims are dealt with within a year and they aim to process the claims within 6 months of default so we must be getting near a default decision soon.

Occident

Reply today. The FSCS were unable to determine whether the sole trader had any assets or not so have been unable to default. Pity but there it is.

Occident

Strange developments since the firm could not be declared in default. My friend gave a blow by blow account of what happened to the FSA when she was mis-sold the mortgage in the hope the broker would never be allowed to broker another mortgage (he has recently tried to start up again). She sent a copy of the FSA letter to the FSCS. Now she has received from the FSCS another application form under a different claim number to apply for compensation. She emailed the claims officer who dealt with her first application to ask if this was a mistake. No reply from him so she has submitted the second application. They must know of the previous application as she mentioned it in the letter to the FSA. Surely if there was new information they would simply have reviewed the first claim? I would be grateful if anyone can shed any light on this. especially our resident site brokers. Thank you.

handytips

Occident
Each registered individual will have or had an FSA number. So will the Ltd Company if registered for mortgage purposes.
Not knowing who the lender is i can only assume the following. Lots of mortgages were arranged via a mortgage packager in 2005. Especially if the lender isnt a Known high street lender which i suspect in this case to be of that ilk, ie SPML, Mortgages Plc, Gmac, Future etc etc and even some high street lenders sold via packagers. There are very very few packagers left and most went bust shortly after the credit crunch. I suspect that your friends case was introduced to the packager if this is the case then the packager will have had an FSA number or they would not have been able to trade. There will be an FSA registration number somewhere on the application or definately on the letter of Offer. What perplexes me a little is this, why didnt your friend check the paperwork surely they would have known what the term is ! and surely they would have known what product they were getting ?
As for being ex directory. Well that means nothing as you can readily purchase residential numbers discs via BT. i get many cold calls on my business phone !! and on my residential phone. In these days of Internet Obsession, people will often need to enter their name address and phone number on many sites when registering for a service. Guess what. This info is then sold on to various people including Brokers, Moneysupermarket and Beathatquote will take info and sell it on, sometimes back in 2005 a broker would pay anything upto £200 per lead. Now some people genuinely went to these kind of sites to seek the services of a broker, but many didnt. Mortgages are regulated therefore the internet CANNOT give advice it has to come from a qualified advisor.
Therefore the call may have been luke warm rather than cold. I totally condone the broker in this case and it is testament that they are no longer trading. Please dont tar us all with the same brush.
The driving force in recommending the product that your friend took will probably have been determined by the amount of procuration fee paid by the lender. Some of the sub prime lenders would offer anything up to 2% of the loan, whereas the high street is approx 0.35% of the loan. Plus i would imagine your customer will have paid them a brokerage fee. There is nothing wrong with a brokerage fee, but only if you are getting good advice and above all a product that suits the clients needs and preferences. I wish your friend well in her quest for justice (compo) but i fear that the outcome will not be favourable.

Senior_Paper_Monitor

I think you mean CONDEMN rather than "condone" Mr Tips !!!

handytips

Sorry Mr Chips

Occident

She had accepted that she wasn't going to get compensation and her sole purpose for writing to to the FSA was to prevent this broker from selling mortgages ever again. There was no FSA number on the Offer and the FSA number is unknown. My friend got no other paperwork - all she ever received from him was his business card. She was a first time buyer and knew nothing about mortgages and this crook took advantage of that. She was only offered one very unsuitable mortgage, her credit rating was and remains excellent and she has no arrears of any kind. The individual was not registered and doesn't need to be if he is employed by a company. There was no limited company involved. His employer was assumed to be another sole trader who was authorised. The lender is a main high street lender and they weren't able to give her the FSA number. My friend sent them an SAR and they offered her a selection of numbers, neither of which was the correct one. Then they said they had the number on their system but not in a way that could be shown to the consumer. This has been drawn the FSA's attention. My friend does not know the number under which the sole trader applied for a mortgage. He applied direct to the main street lender - there were no packagers involved.

My question was really about why the FSCS would send her another claim form after she wrote to the FSA rather than review the original claim. The new information was the the sole trader was in business before the trader believed to have been his Principal was in business. The FSCS pursued the other trader after the first claim but it looks as if they should have been pursuing him. I feel that may be the reason they might have asked my friend to make another claim.

I don't share your view about compensation. If this isn't mis-selling, I don't know what is. The barrier to my friend getting compensation was not the merits of her claim but the FSCS not knowing whether the company has assets or not. For some reason they have asked her to apply again rather than review her original claim and this has happened in the aftermath of her letter to the FSA a month ago.

Occident

It's been a while since I started this thread and there has been a lot of water under the bridge since then. I did a lot of research for my friend and discovered that the rogue broker had been a Sole Trader all along. Whether or not the FSCS regard him as a partner with the other trader using the same business name or a trader in his own right I do not know. My friend sent this information to the FSCS and was sent another claim form opening a fresh case. Again she has no concrete information but assumes they are now pursuing the rogue broker - they wouldn't just pursue the first broker again when they have already done so. Even if it is regarded as a partnership, each partner is liable for the debts of all the other partners and they can pursue any of them. Enquiries under then new claim were started at the beginning of July so she waits in hope. I am also of the belief that they wouldn't have gone through a default enquiry again if they felt she had no case. Any comments are welcome.

kingstreet

I take it we're talking about Northern Rock and a Together product here, Occident? There's only ever been one other product similar to it provided by Coventry's Godiva unit but it has some differences.

Coming back to the issue of the sale, there would be fairly clear reasons for choosing Together and if these issues didn't form part of your client's financial makeup then you wouldn't go that route.

Low/no deposit - the applicant had little or no savings and would be unable to proceed without a 100% mortgage otherwise.

Low income - the applicant needed a stretch to around 5 x gross annual income.

Existing credit - the applicant had credit commitments which would/could be consolidated into the unsecured loan element.

Capital needs - the applicant needed funds over and above the mortgage for other purposes.

Did any of these apply to your friend?