Mis-sold Second Mortgage

spudafett

Hello,

I'm very new here, this is my first post, and hope it's in the correct place.
I'll try to keep it brief.

I have recently tried to claim against FirstPlus for the mis-selling of a second mortgage I took out with them in Oct. 2005. I went through the Financial Ombudsman, who were very good, but it turns out they can't find anything wrong with what FirstPlus did. However, it transpires they used a broker lead in the selling of the loan a Compass Finance LTD.
From the nature of my complaint it appears I would have to make my comlpaint against Compass Finance LTD. Unfortunately, they have ceased trading. Not to worry, I thought, I'll contact the FSCS as I had checked and they were register after the scheme came into existence, etc.
What I didn't realise was the FSCS do not deal with second mortgages.
I am now stuck with a second mortgage that I believe I have a good case was mis-sold to me but no one who can actually look at my case that I know of.
Would any of you good people know of any other avenue I could pursue?

Cheers, Spudafett.

dunstonh

I have recently tried to claim against FirstPlus for the mis-selling of a second mortgage I took out with them in Oct. 2005. I went through the Financial Ombudsman, who were very good, but it turns out they can't find anything wrong with what FirstPlus did.

Not surprising as there is virtually no regulation in second charge secured loans (which is changing in a couple of months). Its little more than you getting what you a apply for. Nothing like the regulation required for first charge mortgages. Plus, in your case you used a broker. So, the lender only gets an application in the post and has no liability over what the broker does.

From the nature of my complaint it appears I would have to make my comlpaint against Compass Finance LTD. Unfortunately, they have ceased trading. Not to worry, I thought, I'll contact the FSCS as I had checked and they were register after the scheme came into existence, etc.
What I didn't realise was the FSCS do not deal with second mortgages.

Yes. They are only becoming regulated under the same level as first charge mortgages in a few months time.

I am now stuck with a second mortgage that I believe I have a good case was mis-sold to me but no one who can actually look at my case that I know of.
Would any of you good people know of any other avenue I could pursue?

You havent said what your complaint is. It is difficult to be mis-sold something that is unregulated as there are effectively no rules to follow other than basic retail ones. However, it doesn't matter as you have no-one to complain to.
You cant complain to the firm as they no longer exist.
You cant use the FOS as the company no longer exists (and its an unregulated area so FOS would have been limited anyway)
You cant use the FSCS as its an unregulated transaction.
You cant use the courts as the company no longer exist.

Game over.

Thrugelmir

On what grounds do you believe it was mis-sold. Mortgages are normally applied for, a formal mortgage offer made and the borrower accepting the terms on offer.

spudafett

dunstonh - I had a feeling my case was doomed when they mentioned not touching 2nd loans. No chance they retrospectively apply the rule change by a decade is there?
Feels like I took my loan out at El Banco in some Spaghetti Western, only without the horses, guns or catchy soundtrack.

Thrugelmir - I was going along the lines of:
• The mortgage was not suitable for me.
• The adviser did not properly establish my attitude to risk.
• I was not advised that there were other options, such as a DMP, that I could have pursued.
•Your adviser did not give me examples of the cost of a Capital and Repayment mortgage compared to the lower costs of an Interest Only mortgage.
•When remortgaging to consolidate my debts I was not advised that it would be cheaper for me to put all of my loans, credit cards and finance onto my existing mortgage rather than remortgaging.
•I was not advised that by remortgaging I was exchanging my short term debts for a long term debt by adding it to my mortgage. It was not explained to me that although I would be lowering my monthly outgoings initially, I may well be lengthening the term of my debt and vastly increasing the amount of interest that I would be paying.
Unfortunately, as it was a broker lead it rest with them and they don't exist any more...

ViolaLass

Was the broker advising you on how best to deal with your debts or on how to get a second mortgage?

Thrugelmir

• The mortgage was not suitable for me.
The product was suitable for the purpose you intended.

• The adviser did not properly establish my attitude to risk.
You were looking to borrow money not buy investments.
• I was not advised that there were other options, such as a DMP, that I could have pursued.
Not a mortgage brokers remit nor their area of expertise. You could have gone to the CAB if it was advice you required.
•Your adviser did not give me examples of the cost of a Capital and Repayment mortgage compared to the lower costs of an Interest Only mortgage.
Was this an option available from the lender. Normally lending of this kind is repayment based.
•When remortgaging to consolidate my debts I was not advised that it would be cheaper for me to put all of my loans, credit cards and finance onto my existing mortgage rather than remortgaging.
Perhaps it wasn't an available option given your financial circumstances. Sounds as if you are clutching at straws. As you mention DMP's above. In which case your options would have been limited in any event.
•I was not advised that by remortgaging I was exchanging my short term debts for a long term debt by adding it to my mortgage. It was not explained to me that although I would be lowering my monthly outgoings initially, I may well be lengthening the term of my debt and vastly increasing the amount of interest that I would be paying.
That's questionable. Credit cards on minimum repayments can take 30 years or more to repay. You choose the term of the second mortgage. Nothing to stop you overpaying the loan. After all you've had annual statements. Alternatively remortgaging more recently to another lender.

Hindsight is wonderful. Particularly 10 years later. I doubt that you can accurately recall the conversations at the time. You were in no doubt under severe financial pressure. As a consequence accepted what was on offer.

FirstPlus is a subsidiary of Barclays Bank. So a reputable Company serving a particular segment of the lending market.

The broker appears to have fulfilled their role. You got what you wanted.

spudafett

I was trying to find the best way to deal with my mounting unsecured debt, the second mortgage was their advice, probably helped by the nice commission they received from FirstPlus for sending them the deal.

I still don't understand how FirstPlus can be liable, and accept liability, for a PPI policy, payout with interest and remove it from the loan account, but not the actual loan when they were sold at the same time. This 'selling at the same time' was confirmed by FirstPlus themselves as well.

spudafett

Thrugelmir - Everything you have said I agree with except I haven't received one annual statement from FirstPlus (who have now sold the loan on to a third party). I was beginning to think of the re-mortgaging with another but my credit score is VERY poor. I was thinking of approaching my original lender and seeing what they say. I would definitely end up paying less per month as the APR on the FirstPlus loan is still high.

dunstonh

I still don't understand how FirstPlus can be liable, and accept liability, for a PPI policy, payout with interest and remove it from the loan account, but not the actual loan when they were sold at the same time. This 'selling at the same time' was confirmed by FirstPlus themselves as well.

For PPI, the courts ruled that the lender is responsible for PPI when the commission is of a high amount and the commission was not disclosed. So, the liability for PPI has gone back to them for PPI. (Plevin case)

PPI is regulated. Second charge lending was not (and no, it wont be retrospective)

To be honest, your list of complaint reasons reads a bit like a dodgy internet template letter including a number of irrelevant points. One doesnt even have anything to do with borrowing. The others are first charge lending requirements or not applicable to second charge borrowing. You may not be happy with it but back then it was a case of you getting what you asked for. Typically, you only used First Plus in the first place if you couldnt borrow money from your own 1st charge lender. They were a sub prime lender.

You need to call it a day and stop wasting time on this as you are out of options. Put it down to experience and move on with your life. See if you can get anything from your current lender if you move it to them.

spudafett

dunstonh - Hahaha, I did get some the points from the WHICH website. I'm now more aware of the difference in regulation between first and second charge borrowing as it relates to my time frame.

I only wish I had know of DMP, etc. back then!

Thrugelmir

spudafett wrote: »

Thrugelmir - Everything you have said I agree with except I haven't received one annual statement from FirstPlus (who have now sold the loan on to a third party). I was beginning to think of the re-mortgaging with another but my credit score is VERY poor. I was thinking of approaching my original lender and seeing what they say. I would definitely end up paying less per month as the APR on the FirstPlus loan is still high.

If your credit record is very poor then your lender isn't going to offer you any assistance I'm afraid to say. The rate of interest on offer reflects the perceived risk to the lender. Converting unsecured into secured debt is never advisable for obvious reasons.

Have you sought advice from anyone regarding your financial circumstances?