Lifetime ISA - deposit on exchange

masonic

Mover2021 said:

Thanks @eskbanker, they point blank refused to cover any cost temporarily. We have now agreed to exchange and complete on the same day as a workaround, but I do plan on making a formal complaint (for all the good it will do!). 

It might do some good. Perhaps they will change their ridiculous "internal policy" and future FTB won't have to go through this. You should some sort of good will payment or reduction in fees for the stress and inconvenience.

Mover2021

masonic said:

Mover2021 said:

Thanks @masonic After a lot of back and forth and me providing LISA guidance, they confirmed that it is an internal rule that they apply at their firm (not using LISA funds as deposit upon exchange), rather than any official guidance. 

Extremely annoying that they didn’t make that clear upfront, as we would never have used them!

Have they pointed you to the written rule within the terms you agreed? Or is it one of those "internal rules" they make up on the fly to do as they please?

Either way, I'd definitely be pursuing a complaint if they don't ensure you are put back into the position you would have been in if they adhered to the official scheme rules and legislation.

It is very much the latter! They’ve made no reference to it at all, and we’ve been ready to exchange for weeks (waiting for the chain to catch up), so they’d had plenty of time to mention it. 

If we do successfully exchange and complete next week we won’t have suffered any detriment (other than personally in terms of stress levels!), but I will still complain officially. It might prompt a change in their internal policy that will mean future customers don’t go through this. 

Mover2023

Hi all,

I thought I'd add my experience here as I have just been through the exact same situation.

My partner and I have the majority of our funds towards our first property purchase tied up in our LISA accounts (Nutmeg). A matter of days before we expected to exchange our solicitor informed us that they would not accept these funds as an exchange deposit. We had seen no internal policy, no company guideline, received no communication of this prior to this point, despite them being aware of our financial circumstances for months. Obviously the only information we had to go on up to this point was official government guidance, and the information from our LISA provider, which all stipulates very clearly that you can use LISA funds as an exchange deposit. 

I tried to get my solicitors to show me their policy where this is stated, however there is no such document. It is simply "a given in the industry" and we were expected to take this without pushback! The only evidence I could find of this approach was this very thread - even our mortgage brokers have never heard of this! This approach of theirs comes from the LISA providers stipulating that "funds should be returned to the investor's LISA account" in an event of a house purchase falling through. I.e., they believe that if for whatever reason the chain fails, they would personally have to reimburse us the full amount of our funds, now lost up chain and inaccessible to the solicitors.

I understand this approach if this indeed was the case, however I got in touch with my provider who made it clear that in the event of a failed purchase, the solicitor would be responsible for returning any available funds to us, and for providing justification of any shortfall. I.e., if our money was held up chain, they would simply have to declare this, but not financially reimburse this. The money lost up chain would then be considered as an official withdrawal on our part, and we would be financially liable for the withdrawal fees - not the solicitor.

Even when I showed my solicitor the documentation that states this, they flat out rejected the idea of reconsidering their approach towards our case as they have worked in this way on hundreds of cases and 'never had any problems' - absolutely despicable given I had written documentation confirming they would not be liable for reimbursing our funds. They blamed the whole situation on our LISA product "being mis-sold" to us. There seems to be a complete industry-wide reluctance to communicate with the LISA providers on this matter.

There was absolutely no room for same day completion and exchange in our chain, so we were incredibly fortunate that our family members are loaning us sufficient cash for the exchange deposit, to be returned on completion when our LISA fees are used, and that our vendors accepted a reduced exchange deposit. If this was not the case we would have had to drop out on account of the solicitor's negligence! We were completely horrified that a) this approach was not disclosed to us sooner, and b) they were completely reluctant to review key evidence relating to their responsibilities. 

masonic

Mover2023 said:

There was absolutely no room for same day completion and exchange in our chain, so we were incredibly fortunate that our family members are loaning us sufficient cash for the exchange deposit, to be returned on completion when our LISA fees are used, and that our vendors accepted a reduced exchange deposit. If this was not the case we would have had to drop out on account of the solicitor's negligence! We were completely horrified that a) this approach was not disclosed to us sooner, and b) they were completely reluctant to review key evidence relating to their responsibilities. 

That's certainly a cautionary tale for others to get confirmation they will be able to use the LISA as permitted in law up front, and if not choose a different solicitor.

eskbanker

Worth a formal complaint to the company IMHO, and escalation to the Law Society if not taken seriously....