Mortgage Arrangement fees rolled up in loan = misselling ?

2sides2everystory

I had one of those calls today from a claims company and was introduced to what to me seemed a new angle on loan misselling.

Apparently it was always wrong to roll up any arrangement fees with the original loan?

It seems basically to be an extrapolation of the thinking behind single premium PPI premiums rolled up into the initial loan which I strongly agree was always misselling deliberately sponsored by the issuer of the product.

So have I come late to this idea with arrangement fees or is it a new opportunity for customers to put in claims?

dunstonh

Apparently it was always wrong to roll up any arrangement fees with the original loan?

It has never been wrong and still isnt wrong. Many people do it and its acceptable to do it.

So have I come late to this idea with arrangement fees or is it a new opportunity for customers to put in claims?

Just a scam claims company trying to find an excuse for you to put a complaint in and try and sucker money out of you.

2sides2everystory

dunstonh wrote: »

Just a scam claims company trying to find an excuse for you to put a complaint in and try and sucker money out of you.

I think I know how you feel about most of the 'claims/compensation industry' but when you say scam claims company are you making a distinction between those registered with the Ministry of Justice and those operating outside the law or just expressing your understandable bias due to the nuisance they cause perfectly upright IFAs?

I don't disagree that the claims/compensation industry generally is just on a bandwagon, but the logic behind the assertion that upfront "application fees" bound into the loan is misselling is not bad logic. You and I can recall when there generally were no "application fees". There were valuation fees and legal fees but "application fees" are a mere wheeze as blatant as Ryanair's Check-In fees. You can't buy the product without applying

So it was always just a way of artificially front-ending a product, wasn't it? And therefore to add it to the loan and make it subject to interest is as bad as doing the same with a PPI premium, surely?

dunstonh

I think I know how you feel about most of the 'claims/compensation industry' but when you say scam claims company are you making a distinction between those registered with the Ministry of Justice and those operating outside the law or just expressing your understandable bias due to the nuisance they cause perfectly upright IFAs?

Regulation under MoJ means nothing. You could be up and running with MoJ authorisation within a couple of weeks. Just look at how many claims companies are getting struck off and the number of people posting here with issues.

You also just have to look at the way the uphold rate on PPI cases with the FOS has dropped from 92% to 68% as they start encouraging complaints without basis.

but the logic behind the assertion that upfront "application fees" bound into the loan is misselling is not bad logic.

The FSA dont view it as that and nor do the FOS. On non-advised cases, it is down to the choice of the borrower. On advised cases, the requirement is for the adviser to make the person aware that adding the fee to the mortgage will result in them paying it back with interest over the term agreed and that they can pay it back earlier if they so wish.

If the adviser on advised cases fails to document it then they leave themselves open to potential complaints against them but most put it in the report as a standard risk warning to protect themselves from such complaints.

2sides2everystory

dunstonh wrote: »

Regulation under MoJ means nothing. You could be up and running with MoJ authorisation within a couple of weeks. Just look at how many claims companies are getting struck off and the number of people posting here with issues.

I agree 100% with that.

If the adviser on advised cases fails to document it then they leave themselves open to potential complaints against them but most put it in the report as a standard risk warning to protect themselves from such complaints.

Interesting, but I suppose some mortgage advisors habitually didn't and left the door wide open ...

dunstonh

Interesting, but I suppose some mortgage advisors habitually didn't and left the door wide open ...

Its possible it may not appear in some but its been a general risk warning for some years. It's one of those that should be automatic in the same way investments gets the "could get back less than you paid in" style risk warning.

Plus, mortgage regulation only began in 2004. So, the window is not big and the odds of it missing are low. And even if it is missing, I would expect them to request evidence that there was sufficient savings available for the borrower to pay the fees out of their own funds. If not, then it would be an easy rejection. If there is and it's not documented, then you would have to think the complaint is upheld.

I think if you look at all that and play the odds, then you have to say its very unlikely. Its a bit like contracting out of SERPS. The FSA felt that had a failure rate of just over 1%. A tiny failure rate and one the FSA issued a flow chart on to see if you feel inside that 1%. Yet is didnt and still doesnt stop claims companies telling people they were mis-sold on contracting out. Typically the claims companies that do this either charge a non-refundable £495 up front knowing full well that there is only 1 in 100 chance of success (not that they tell the mug that falls for it) or one that pops up often on the pension forum is the company uses the suggestion of mis-sale, charges nothing to put the complaint in but then in process they recommend the pension is transferred and take maximum commission on it. They are using a lie to get the person hooked to generate real business.

_Andy_

Another 'mis-selling' thread where there isn't any then.

magpiecottage

_Andy_ wrote: »

Another 'mis-selling' thread where there isn't any then.

I crashed my car last year - should I complain to the manufacturer or the dealer that sold it to me?

Or perhaps the insurer or the broker because if I had not been sold insurance I would not have been allowed to drive it?