Are banks’ online mortgage offers subject to advertising standards law? 28 September 2022 at 8:34PM in Consumer rights 26 replies 771 views

Straightbat

When a mortgage offer has been made in principle linked to a specific product, and a registration number given to enable you to log in to complete the full application by 10pm the same day, but the the online system repeatedly hangs throughout the day after several stages have been completed…and then the product is no longer available the next day and you can no longer access the partly populated application form…

It seems to me that, notwithstanding the extenuating circumstances, the bank, if subject to advertising standards law for the product, would have failed to adhere to some of these standards:

3.28

Marketing communications that quote a price for a featured product must state any reasonable grounds the marketer has for believing that it might not be able to supply the advertised (or an equivalent) product at the advertised price within a reasonable period and in reasonable quantities. In particular:

3.28.1

if estimated demand exceeds supply, marketing communications must make clear that stock is limited

3.28.2

if the marketer does not intend to fulfil orders, for example, because the purpose of the marketing communication is to assess potential demand, the marketing communication must make that clear

3.28.3

marketing communications must not mislead consumers by omitting restrictions on the availability of products; for example, geographical restrictions or age limits.

3.29

Marketers must monitor stocks. If a product becomes unavailable, marketers must, whenever possible, withdraw or amend marketing communications that feature that product.

3.30

Marketers must not use the technique of switch selling, in which their sales staff decline to show the advertised product, refuse to take orders for it or to deliver it within a reasonable time or demonstrate a defective sample of it to promote a different product.

It seems to me that if the bank send you an email to allow you to access the product’s full application procedure, but then deny you access to complete it by their deadline, and all the while its availability is still showing on their web-site, they should be duty bound to allow you to complete the application.

Do we have any redress in law?  What advice would you give?  TIA

visidigi

I don't see any redress applying here - all the banks were bombarded with people trying to change/adjust/take out mortgages since the 'budget' announcement.

Extenuating circumstances would apply here for me.

CKhalvashi

visidigi said:

I don't see any redress applying here - all the banks were bombarded with people trying to change/adjust/take out mortgages since the 'budget' announcement.

Extenuating circumstances would apply here for me.

I agree.

There has been a very large movement in various financial instruments over the last few days due to mismanagement of the UK's public finances on scales that have never been seen before.

It is therefore reasonable that banks could not have foreseen this and have acted completely properly.

user1977

Straightbat said:

Do we have any redress in law?

The ASA isn't designed to give you redress. There's a completely separate set of regulation if you think a lender has treated you unfairly in your individual dealings with them.

But in any event, they've got to reserve the right to withdraw products from sale due to changes in the lending market. If you think they were actively continuing to market products which they had already withdrawn, then I expect the ASA might be relevant.

Straightbat

For me, the least they should have done was to post an alert on their website.  Not being able to make an application or not receiving a code to register to proceed with an application is completely different to completing these stages and then being dumped after being given access to the portal for the final stage for a specific product.  The BBC reported tonight that brokers are saying that if someone already has a mortgage deal agreed, then it should and will be honoured.  What about banks?

it is my view that where they have not publicly withdrawn products it is because they want to fish for consumers who can be routed to their mortgage advisors so that they can gain more business by selling the alternative new products, in contravention of 3.30 in my post.  Other banks pulled their products publicly very quickly, so there should be no 3.29 get out clause that it was not possible.

user1977

Straightbat said:

The BBC reported tonight that brokers are saying that if someone already has a mortgage deal agreed, then it should and will be honoured.  What about banks?

Mortgage brokers are saying that if somebody already has a mortgage offer then it (almost certainly) will be honoured. They're not saying that if you have still to submit a full application, it will still be available.

Straightbat

user1977 said:

Straightbat said:

The BBC reported tonight that brokers are saying that if someone already has a mortgage deal agreed, then it should and will be honoured.  What about banks?

Mortgage brokers are saying that if somebody already has a mortgage offer then it (almost certainly) will be honoured. They're not saying that if you have still to submit a full application, it will still be available.

In my view, if access has been given to complete a further process, the purpose of which is to verify information already given and check affordability on a specific deal, based on AN APPLICATION already accepted subject only to those routine checks, it should be honoured.  The OFFER HAS BEEN MADE because the only reason for refusal is if the applicant for some reason does not meet the criteria, NOT because the bank decides to change its mind about product availability.   It can do that for new applicants, by no longer offering the product.

visidigi

There's an important point here. They don't have to do business with you. There's no contract in place, there's no guarantee that these 'routine checks' = success. So even if they did honor your application they are well within their rights to turn you down for approval at any point, based on their own criteria or risk assessment.

So your view is, unfortunately wrong.

user1977

Straightbat said:

user1977 said:

Straightbat said:

The BBC reported tonight that brokers are saying that if someone already has a mortgage deal agreed, then it should and will be honoured.  What about banks?

Mortgage brokers are saying that if somebody already has a mortgage offer then it (almost certainly) will be honoured. They're not saying that if you have still to submit a full application, it will still be available.

The OFFER HAS BEEN MADE 

It hasn't though. The loan amount is only reserved from the wholesale funds the lender has access to if and when you make a successful, full, application. A huge proportion of agreements in principle never go anywhere - they're not going to reserve funds for every one of those.

Ask on the Mortgages board if you want to hear from people with more knowledge about the process (and any grounds for complaint, though I can't see that you have any from what you've told us).

Straightbat

visidigi said:

There's an important point here. They don't have to do business with you. There's no contract in place, there's no guarantee that these 'routine checks' = success. So even if they did honor your application they are well within their rights to turn you down for approval at any point, based on their own criteria or risk assessment.

So your view is, unfortunately wrong.

Yes, I have pointed out I think that they are within their rights to turn me down if their criteria prove not to be satisfied - those criteria are affordability criteria + property valuation.  My point is they have not turned me down based on those criteria but have offered me a product subject only to my meeting them.  I disagree that there is no contract in place as the mortgage was offered subject only to those criteria being met but withdrawn (apparently) without assessing them, which on the basis of their still advertised products they should have done.  As I think I said, if other banks could withdraw products publicly, then why could not they as required by the code copied in my original post.

A contract does not have to be a signed agreement - just a verbal contact is a contract, but this was far stronger than that with written confirmation and a PIN number with which to proceed - which process repeatedly failed without any explanation.

Straightbat

user1977:

It is the lender’s responsibility to reserve the funds - if they choose not to do this when the offer is first made that is their choice.  If there is a risk of not fulfilling the offers made further down the line, they should not continue advertising the product.  Please see advertising standards above.