Are banks’ online mortgage offers subject to advertising standards law?

k3lvc

Straightbat said:

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 I disagree that there is no contract in place as the mortgage was offered subject only to those criteria being met but withdrawn (apparently) without assessing them, which on the basis of their still advertised products they should have done.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.

But those aren't the only criteria - they reserve the right up to the point of transfer of funds to withdraw and, as others have said, the current extenuating circumstances in the market will see many in your situation. From what you've said your PIN was not a contract, merely an invitation to proceed to the next level of Full Application which, even if you'd got there, could well have (and is likely to in the case) lead to rejection.

By all means have a rant about it but in terms of redress you're not going to get any

saajan_12

Straightbat said:

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 I disagree that there is no contract in place as the mortgage was offered subject only to those criteria being met but withdrawn (apparently) without assessing them, which on the basis of their still advertised products they should have done.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.

The point is they can turn you down for more than just affordability and valuation.. they may decide they don't want risk to a particular type of property, they may not have sufficient funds, etc etc. The advertisment can be and often is 'subject to availability'.

Per advertising standards, they may have ensured they had sufficient funds for the usual % of people who they would offer out of everyone that sees the ad or makes an application. But if there's suddenly a spike then they can't be expected to reserve for all those. Similarly, a billboard for a 10p can of beans - they shouldn't advertise if they know they have 0 stock and won't be getting any. But if they have enough for their usual footfall, then that's enough. There's no expectation that theres stock for every person that might drive past the billboard in case suddenly all of them want one. 

There certainly is no contract here based on the 3 cornerstones of a binding contract.. you made an offer but they haven't accepted it yet and there has been no consideration. 

Manxman_in_exile

Perhaps I'm mistaken, because it's many years since I had anything to do with a mortgage, but isn't the OP getting confused by the term "mortgage offer"?

As I say I may be wrong, but isn't a mortgage offer more akin to "an invitation to treat" from a retailer?  Many people mistakenly believe they have entered into a contract to buy something when all they have done is offer to buy and a contract is only formed when the retailer accepts the buyer's offer.

Isn't it the case with a "mortgage offer" that it isn't a contractual offer at all, and that a contractual offer is only made when the borrower offers to take up the "mortgage offer", and that a contract is only formed  after the lender accepts the borrower's offer?

A mortgage offer from a lender is really just an invitation to proceed further and not an offer to a potential lender to enter into a contract.

At least that's how I've always understood it, but it's over quarter of a century since I took out a mortgage so I may be completely wrong...

Manxman_in_exile

@Straightbat -  again I may be mistaken (see previous post) but I think you might be labouring under the impression that there is something called "advertising standards law" and that it is enforced by the ASA.(?).

I'm not sure the law is as you believe.  As far as I know the only laws that relate to the advertising of products are those legal provisions covering aspects such as misrepresentation (eg was a product that was sold to a consumer accurately described), certain restictions on advertising items as being "on sale at reduced price", and certain requirements about advertising interest rates and APRs etc.  Things like that.  I don't think the law says anything about the availability or lack of availability of products advertised for sale.

As far as I'm aware. the ASA standards are just that.  Standards or guidelines and not legally enforceable.

Straightbat

saajan_12 said:

Straightbat said:

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.

The point is they can turn you down for more than just affordability and valuation.. they may decide they don't want risk to a particular type of property, they may not have sufficient funds, etc etc. The advertisment can be and often is 'subject to availability'.

Per advertising standards, they may have ensured they had sufficient funds for the usual % of people who they would offer out of everyone that sees the ad or makes an application. But if there's suddenly a spike then they can't be expected to reserve for all those. Similarly, a billboard for a 10p can of beans - they shouldn't advertise if they know they have 0 stock and won't be getting any. But if they have enough for their usual footfall, then that's enough. There's no expectation that theres stock for every person that might drive past the billboard in case suddenly all of them want one. 

There certainly is no contract here based on the 3 cornerstones of a binding contract.. you made an offer but they haven't accepted it yet and there has been no consideration. 

Again, other lenders were able to withdraw their offers in a timely fashion.  Lloyds have misled the public unnecessarily by not doing so in a timely fashion, contrary to advertising standards.

born_again

Straightbat said:

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.

While you may have a offer in principle. It does not mean that they will offer it to you. 
Mortgage providers only take basic info for a OinP. Once full application is made a good % get turned down with the affordability checks.

Also many offer have been pulled at very short notice in the last few days. So unless a full application had been made then, sadly that is the end of the matter. 
While the ASA may look at it. It will not get you that offer. As that is not in their remit. All they will do is say if the add was not within their standards.

DullGreyGuy

Straightbat said:

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

ASA do not give redress... their powers are around instructing companies to withdraw adverts etc

ASA can pass matters on to the likes of Trading Standards who in turn can apply fines to firms who continue to breach the rules but this money goes into the public purse not to those impacted. 

All of the above items are in relation to physical products with a defined stock amount... whilst banks cannot lend endlessly its not the case that their ABC Mortgage 2 year fix was limited to 10 sales. There was no reason to believe they couldnt meet demand when the ad was created. There was no real prospects of them being unable to meet demand from a capacity to lend perspective (which is what the stock parallel would be) 

3.28.3 and 3.29 you've not said how you think they broke those terms.

What you are talking about is an operational limitation caused by an unprecidented surge, not a stock issue. Changing a website and removing an advert is not a 5 minute job in a multinational financial services company exactly because regulators require that due consideration is given to any changes. You need to find the relevant section which says that if 100x the normal number of customers turn up as usual you have enough cashiers to process all the sales before the offer expires... I am fairly certain you wont find such a rule though.

TELLIT01

The last few days have been 'extraordinary circumstances' for the financial services sector, and some systems will have had less resilience than others.   The fact that an IT system failed does not mean that a bank has failed to comply with advertising standards laws.  Even if the OP had managed to complete all the forms, there is no certainty that a mortgage would have been granted.  I was watching a programme this morning where it was suggested that all current mortgage applications, even those already agreed in principle, are likely to be looked at again to see if the applicant will still be able to afford repayments if interest rates continue to increase.

DullGreyGuy

TELLIT01 said:
I was watching a programme this morning where it was suggested that all current mortgage applications, even those already agreed in principle, are likely to be looked at again to see if the applicant will still be able to afford repayments if interest rates continue to increase.

Agreed in principle gives no certainty at all... its not even a conditional offer... even in normal circumstances an in principle agreement would be subject to actual underwriting including affordability checks 

Straightbat

In reply to several comments, not passing affordability checks is not the issue.  That is a secondary matter. It is a case of misleadingly offering a product that you have no intention of doing affordability checks on. 

As already said, if other banks can withdraw products publicly in a timely fashion, why can’t Lloyds?  The fact that so many others did would seem to bely the validity of the proposed exceptional circumstances get out clause I am afraid!

Re the applicability of advertising standards, whether or not they were a) applicable b) enforceable was actually a main point of my original enquiry, not presumptions on my part.  However, a company which does not adhere to reasonable guidelines which then adversely affects a consumer (who could have applied elsewhere while he still had time) should reasonably be held to account; and whether standards are enforceable or not, could reasonably be expected to offer redress if possible.