Recourse on poor mortgage advice?

Nearlyold

Did your mother have a formal appointment to obtain advice on her financial situation from the banks Financial Adviser - in which case there is an outside chance of there being some record of the meeting and the advice given, the chances would increase greatly if your mother was sold some financial product that the £25K was kept back for.

If your mother just had an informal chat with a customer service person at the bank and as a result decided not to repay £25K of the mortgage there is unlikely to be any record.

When you say the bank convinced your mother do you mean they set out with the objective of persuading her not to repay all the mortgage? ( NB no one at the bank would have profited from this unless she was sold a product that used the £25K) OR Do you mean the options were discussed and your mother chose which option she preferred?

What is your mother's recollection of the meeting?

Many folks might make the same decision as she did on the basis they would rather have £25K on a mortgage and £25K in the bank than no mortgage but nothing in the bank.

iammumtoone

I am not sure the bank were wrong in offering the alternatives it was your mother that made the final decision. Yes it was very soon after your fathers death but your mother choice to go to see them so they are not a fault for the timing. Maybe nowadays someone at the bank might point out its a bit soon for major decisions but they didn't do that 15 years ago, a lot has changed since then.



As above if she only just had enough ,money to pay off the mortgage then to put it all into it would have been a bad move, what it the house needed major repairs soon after, where would the money come from for that, especially if your mother had no other source of income. Also people were always advised to keep some on the mortgage to avoid early payment fees.


Why are you worried about disputing this now? Is it because the term is up and your mother doesn't have the means to pay? Rather than fighting that you think they gave bad advise about not paying it all off maybe concentrate on if at the time your mother was fully informed what interest only meant and if they checked she had means to pay at the end ie was she told she needed to keep the 25K safe and replace any money she spent of it.

dunstonh

This resulted in here paying interest (~7%!)

Why the exclamation? That is around the long term average figure. Nothing unusual with 7%.

I would confront them about administering poor financial advice and/or mis-selling.

1 - it cannot be a missale as no sale of product took place
2 - its unlikely it was financial advice. if it was, there would be a written report issued and the records would still exist today.
3 - it was probably little more than a conversation with a bank clerk with no audit trail it ever happened.

I doubt it was financial advice. Its not the sort of thing the banks would put in front of their in-house financial advisers unless the bank invested the £25k that would have been used to clear the mortgage.

So, what did your mum do with her £25k of savings? What other savings did she have? (there may have been concerns if she was income heavy but capital light - paying off the mortgage may have left her with no capital). - just another potential scenario as we have so little to go on.

it is very common for advisers to tell people to do nothing whilst you are grieving and then look at the situation once you feel better and able to concentrate on financial affairs.

iammumtoone

dunstonh wrote: »

it is very common for advisers to tell people to do nothing whilst you are grieving and then look at the situation once you feel better and able to concentrate on financial affairs.

But was that very common 15 years ago? Things have moved on in this area very quickly.


My mother died suddenly when I was young but old enough to realise what happened, I was back to school the following week. That was it. No counseling no school checking up on me asking if I was ok. Hard to image now but this was only 30 years ago.

dunstonh

But was that very common 15 years ago? Things have moved on in this area very quickly.

It is hard to say. For an IFA, I would say yes. For a salesforce, probably not. They were too busy trying to hit targets. However, in this case, there are no targets to hit and no personal gain for the individual involved or the branch in general. So nothing to influence the decision.

Karlos1544

this is all incredibly helpful, and has given me a lot of food for thought, particularly around the opportunity cost of paying back the 25k at that time. so thank you for that.

as I wrote 7% i automatically compared to my current rate, which is approx 550 bp less. Thanks all for being so quick to point out this was in line with the market ;-). As mentioned, i have no challenge around the rate.

re the rest of the questions, i need to have further discussions with mum to find out more about the rest of her savings etc.

One thing i do know is that she went in with the intention of paying it all off, and had organised this with a junior member of staff. She was then approached by a more senior person who persuaded her to leave a balance. This leads me to believe it was more than a simple conversation with a clerk.

disputing this now, as have only just got round to looking into it. The mortgage was paid of many years ago, potentially with that same 25K!

does it make sense to simply write them a letter about this asking for further information/records etc? I literally have no idea where to start if we want to pursue this.

thanks again all,

haras_nosirrah

At the time it was common to leave a small balance to get free deeds storage. 25k sounds like quite a large balance for that

Karlos1544

I'm sitting here with my mum and she confirms that she had ample other savings at that time, And didn't need the 25k that they persuaded her to keep back. We are working through the other good suggesting a above.

At this stage I would really value any advice on how to kick off enquiries with the bank about this, even if it comes to nothing. I have never handled anything like this before.

Thanks

dunstonh

One thing i do know is that she went in with the intention of paying it all off, and had organised this with a junior member of staff. She was then approached by a more senior person who persuaded her to leave a balance. This leads me to believe it was more than a simple conversation with a clerk.

Back in my banking days, which is long ago to be fair, the branch had a couple of people dedicated to handling customers dealing with bereavement. These were not management level staff but were a grade above the enquiries staff. Although branch size would have a lot to do with who the individuals were.

The problem you face is that it was a long time ago and is highly unlikely to be regulated financial advice. There is almost certainly going to be no record of such a meeting, let alone the discussion in the meeting. So, it is possible that they will invoke the FCA's timebar guidelines. This is a 3 and 6 year rule. You have to complain within 6 years of the event or 3 years from being reasonably aware of any issue. Repayment of the mortgage could be used by them to trigger the three-year rule. if they do noit activate the timebar, then you are almost certainly going to be at the mercy of the bank in respect of a goodwill gesture.

Nearlyold

Karlos1544 wrote: »

I'm sitting here with my mum and she confirms that she had ample other savings at that time, And didn't need the 25k that they persuaded her to keep back. We are working through the other good suggesting a above.

At this stage I would really value any advice on how to kick off enquiries with the bank about this, even if it comes to nothing. I have never handled anything like this before.
Thanks

Just get your mother to send in a Complaint and see what happens.

What outcome are you/your mother hoping for? You need to bear in mind that while 7% seems a high rate of mortgage interest today, in 2004 the average interest earned on a typical instant access savings account was 4.56% peaking at 5.55% in 2007.