mortgage advice bureau

claudiag23

Hi,


Just looking for some advice, myself and my ex husband to be purchased a home back in 2016 at the time we went to the mortgage advice bureau to try and obtain a mortgage as the ex was self employed and we were told that MAB where the best people to deal with these kinds of mortgages!



In the meeting we had with Emma she picked up on me being nervous as she knew the background and worry we were under about potentially not being able to get the house.


When it came to discussing the insurances it was quite a forced sale on the life insurance as she was kind of making out that we wouldnt get the mortgage unless we got the life insurance through MAB also. So we ended up signing at a premium of £60 p/m, she never ran through all paper work and on the bottom of where we signed and dated she had signed and dated 2 days before? ( I only know this as they sent us a copy across of the signed document)



Anyway .. Fast forward 2 years down the line i am currently going through a divorce and no longer in the property we had bought together, ex husband cancelled the insurance with Aviva as that is who it was with and last week he made me aware that MAB had sent him a letter to say we owe £1200 as we came out of the 48 month 'insurance' early - When infact we did the 2 year term to the end of our fixed mortgage and when we decided to split, I signed my half of the house over we went our seperate ways.



MAB are saying we either have to pay the monies or we take out another 2 seperate policies with them? Why would we do this when essentially they are just a middle man?? We also have 2 new life insurances with new companies also.


How can this be possible when we have had a change of cirmumstances and the insurance isn't even with them? Aviva where totally fine when ex cancelled the policy because you can cancel at anytime.



We already paid £195 plus other little bits here and there along the way when we we're going through the application.


Any advice would be appreciated! I just feel like we are getting royally screwed over by a broker.

[Deleted User]

It sounds as if your contract with them was to buy policies, rather than a higher fee.

Your change of circumstances aren't their concern. If you would prefer not to buy the policies, ask what fee they would accept instead.

dunstonh

and we were told that MAB where the best people to deal with these kinds of mortgages!

Pretty much any mortgage broker or adviser would have been fine.

When it came to discussing the insurances it was quite a forced sale on the life insurance as she was kind of making out that we wouldnt get the mortgage unless we got the life insurance through MAB also.

Some mortgage brokers require the purchase of insurance via them to allow them to give free mortgage advice (its a cross subsidy). That model is allowed as long as the insurance is suitable.

MAB are saying we either have to pay the monies or we take out another 2 seperate policies with them? Why would we do this when essentially they are just a middle man?? We also have 2 new life insurances with new companies also.

When you agree to use the commission to cross subsidise the fee, then the commission has a clawback period (2-4 years typically). So, they have suffered a clawback against the fee and are now asking you to pay the difference.

How can this be possible when we have had a change of cirmumstances and the insurance isn't even with them? Aviva where totally fine when ex cancelled the policy because you can cancel at anytime.

Its possible and normal. Indeed, one of my mortgage brokers had to employ a debt collector in this scenario last year because the person refused to pay.

Any advice would be appreciated! I just feel like we are getting royally screwed over by a broker.

Equally, the broker probably thinks they are being royally screwed over by you.

If done correctly, this method of fee cross subsidy is a very cost-effective way of doing things for consumers. You get the advice but its paid for via commission. The problem is that if the commission is clawed back, it leaves the adviser unpaid. Hence why they come to you.

antrobus

You and your ex husband obtained a mortgage through the MAB. Rather than pay them a fee, you agreed to to take out certain insurance policies and maintain them over a 48 month period, so that the commission they earned on those policies would cover the cost of the service provided.

The policies were cancelled some 24 months later, and you have taken alternative cover elsewhere. You are in breach of contract, I suggest you pay the £1,200 requested. It's likely to be the cheapest option.

dunstonh

I will just add a caveat to what I have said earlier as its possible that they have not done it correctly and if not done correctly, you are not required to pay it.

Correct way

A fee is agreed as a monetary amount but instead of paying the fee, you agree that the commission paid on an insurance policy will cover that fee. Any excess commission should be rebated to you. Any shortfall paid by you. Most providers support a fixed commission amount (which lowers the premium and that is good value for the consumer).

Incorrect way

No fee is agreed as a monetary amount but they use the commission to say that you dont have to pay a fee.

For a clawback agreement to be applied correctly, a specific amount must be agreed in the event of cancellation.

eg. fee agreed £1500. Commission = £1500. 2 years later, policy is cancelled and there is a £725 clawback. This means £775 has been paid but you owe £725. As an amount was specified in the agreement, that would be treated as fair.

If no amount is stated in the agreement and it just says that in the event of a commission clawback they will require you to pay it, that would be considered unfair under the consumer rights act (CRA) 2015. It is also likely to breach the FCA's TCF guidelines.

The key is in agreeing upfront what the fee is. If that happened, then that is how it should be and that is fair and reasonable. If no fee was agreed and they cannot produce a fee agreement then it would be considered an unfair contract term.

So, ask them for a copy of the fee agreement where it states the monetary amount of the fee agreed and the cancellation terms that apply to that amount. If they cannot provide it, then it would not meet the requirements of the Consumer Rights Act (CRA) 2015. You could then counter them by saying that as no fee agreement stated an amount exists, you would like a refund of all the commission they have received to date from you. That is unlikely to happen without legal action but it should be enough for them to stop chasing for the fee.