Mortgage Broker Complaint

123imp

ACG said:

BDM is a business development manager/Account Manager, they work for the lender. 

Your contract so to speak is with the broker. Thats who you need to contact in the first instance. 
If you are not getting answers you need, then you probably need to make a formal complaint.

Ah right. Would a formal complaint be to the Financial Ombudsman? Thanks.

ACG

No, the broker. 
The broker then has to investigate and either accept or reject the complaint. 
If they reject it and you are not happy with that, then you can go to the financial ombudsman. 

123imp

ACG said:

No, the broker. 
The broker then has to investigate and either accept or reject the complaint. 
If they reject it and you are not happy with that, then you can go to the financial ombudsman. 

So if they're a sole broker, they would investigate themselves? Thanks.

ACG

Potentially. 
You should have a KFI/ESIS/Illustration (all the same thing, just a different name), section 11 will say what to do if you have a complaint. 

You should have also received a Terms of Business or IDD - this will also confirm where to go to make a complaint. 

Most firms are either Appointed reps of a larger firm - the larger firm would investigate the complaint, or directly authorised in which case they would investigate the complaint themselves. Ultimately though if they reject your complaint you can take it to the ombudsman so it makes no sense to reject it for the sake of it. 


If I were the broker on this and I had made this mistake, I would do you a mortgage now based on todays rates. If your original mortgage was £500 a month on a 2 year fixed rate and the new one is £600 a month, I would offer to pay you £100 a month for 2 years or maybe £1500-2000 as a lump sum. 

It is slightly more complex than that though, as you were never eligible for the HSBC deal to begin with. So it would actually be the cheapest deal at the time you were eligible for. So lets assume the cheapest deal was £510 a month, that would be £90 x 24 (£2160). 

Hopefully that makes sense. 

Thats what I would offer. You might not agree with that and you might want more, you might want less you might want something completely different. Ultimately whoever made the mistake only has to put you in the position you would have been had the mistake not been made, so they do not have to offer compensation on top for example. 

123imp

ACG said:

Potentially. 
You should have a KFI/ESIS/Illustration (all the same thing, just a different name), section 11 will say what to do if you have a complaint. 

You should have also received a Terms of Business or IDD - this will also confirm where to go to make a complaint. 

Most firms are either Appointed reps of a larger firm - the larger firm would investigate the complaint, or directly authorised in which case they would investigate the complaint themselves. Ultimately though if they reject your complaint you can take it to the ombudsman so it makes no sense to reject it for the sake of it. 


If I were the broker on this and I had made this mistake, I would do you a mortgage now based on todays rates. If your original mortgage was £500 a month on a 2 year fixed rate and the new one is £600 a month, I would offer to pay you £100 a month for 2 years or maybe £1500-2000 as a lump sum. 

It is slightly more complex than that though, as you were never eligible for the HSBC deal to begin with. So it would actually be the cheapest deal at the time you were eligible for. So lets assume the cheapest deal was £510 a month, that would be £90 x 24 (£2160). 

Hopefully that makes sense. 

Thats what I would offer. You might not agree with that and you might want more, you might want less you might want something completely different. Ultimately whoever made the mistake only has to put you in the position you would have been had the mistake not been made, so they do not have to offer compensation on top for example. 

Yes, I received an illustration and this was section 11:-

11. Complaints

If you have a complaint, please contact:

M. ........ ......

**************************** Ltd

S********

***************

***************

*************

******

Telephone: 0**************

Email: ***********************

You can find details on our complaints procedure at http://www.intermediaries.hsbc.co.uk/complaints. Maximum time for handling the complaint: 8 weeks

If we do not resolve the complaint to your satisfaction internally, you can also contact: The Financial Ombudsman Service.


I feel as though I also received the Terms of Business, but I cannot find it in my email. I think I may have read and signed it in their office.

This has all been extremely helpful, I have to thank you thoroughly for taking the time to go through it. To be honest, I feel a little better in knowing that I would never have been eligible for that mortgage with HSBC anyway, but at the same time I assume other lenders would have had different assessment criteria which would have worked for me, and of course I did lose the property I wanted to purchase. I'm going to have a talk with the broker and take it from there. To be honest, I think your theoretical solution sounds reasonable and fair. I don't know if this is a standard approach brokers would take, but I I hope they are also reasonable.

Thanks again.

JMA74

Its an interesting read this one and i think ACG has covered most of the relevant points from a brokers perspective.   Personally I dont run a lot past bdm's and will go off the criteria or live chat.  A lot of lenders BDM's are essentially just sales reps to convince you to use the lender and dont necessarily know the in depth criteria. 

In this case , the published criteria does appear to be fairly cut and dry, the lender will work on the lower of the 2 calculations. HSBC have been that way for years. This criteria hasnt changed. 

The difficulty now though is calculating your losses as a result of this error.   You have lost the property, the broker cant get that back for you.  You have presumably also spent money on solicitors but there is no guarantee the transaction would have completed even if the mortgage had been approved so I'm not sure the broker should be on the hook for those either.   

The offer ACG mentioned of the broker making up the difference is a lot easier for a remortgage where the transaction still completes just on different terms.   Since the transaction didnt complete there could be an argument that there was no guarantee you encountered a loss as you may have pulled out for any reason.  

Be interesting to hear how this one comes out if you are kind enough to keep us updated. I think you deserve compensating in some form but not sure what the offer would be

ACG

JMA74 said:

Its an interesting read this one and i think ACG has covered most of the relevant points from a brokers perspective.   Personally I dont run a lot past bdm's and will go off the criteria or live chat.  A lot of lenders BDM's are essentially just sales reps to convince you to use the lender and dont necessarily know the in depth criteria. 

In this case , the published criteria does appear to be fairly cut and dry, the lender will work on the lower of the 2 calculations. HSBC have been that way for years. This criteria hasnt changed. 

The difficulty now though is calculating your losses as a result of this error.   You have lost the property, the broker cant get that back for you.  You have presumably also spent money on solicitors but there is no guarantee the transaction would have completed even if the mortgage had been approved so I'm not sure the broker should be on the hook for those either.   

The offer ACG mentioned of the broker making up the difference is a lot easier for a remortgage where the transaction still completes just on different terms.   Since the transaction didnt complete there could be an argument that there was no guarantee you encountered a loss as you may have pulled out for any reason.  

Be interesting to hear how this one comes out if you are kind enough to keep us updated. I think you deserve compensating in some form but not sure what the offer would be

Whilst there is no guarantee it would have completed, there is no guarantee it would not have completed and presumably if it is showing as sold on the land registry it would have gone through on a balance of probabilities. 

If they find a new property, you can still work out the difference. 

There is an argument if house prices have risen or dropped in the meantime that should be taken into account but I think that starts to get messy and you could be arguing to the n'th degree. 

If I were the broker, I would hold my hands up and try to do the new purchase. At least then I am getting the commission and that can contribute towards the outlay I would have to make. By trying to sweep it under the carpet you could find the customer goes elsewhere so you no longer get the commission and still end up having to put your hand in your pocket. 

I always look back at a case where I messed up with natwest (when you had to choose the product by the code). I chose the wrong product (a 2 year instead of a 5 year). We only realised 2 years down the line when he received the renewal. All the paperwork said 5 year fix, it was missed on the offer by both of us but it was ultimately my fault. I apologised, worked out how much he was out of pocket, gave him my calculations for him to check, did his next mortgage and paid him what I owed him. He has since been back twice, I have done his son, daughters, niece and partners mortgage. 

Mistakes happen, its life. Its all about how you deal with them in my mind. 

123imp

JMA74 said:

Its an interesting read this one and i think ACG has covered most of the relevant points from a brokers perspective.   Personally I dont run a lot past bdm's and will go off the criteria or live chat.  A lot of lenders BDM's are essentially just sales reps to convince you to use the lender and dont necessarily know the in depth criteria. 

In this case , the published criteria does appear to be fairly cut and dry, the lender will work on the lower of the 2 calculations. HSBC have been that way for years. This criteria hasnt changed. 

The difficulty now though is calculating your losses as a result of this error.   You have lost the property, the broker cant get that back for you.  You have presumably also spent money on solicitors but there is no guarantee the transaction would have completed even if the mortgage had been approved so I'm not sure the broker should be on the hook for those either.   

The offer ACG mentioned of the broker making up the difference is a lot easier for a remortgage where the transaction still completes just on different terms.   Since the transaction didnt complete there could be an argument that there was no guarantee you encountered a loss as you may have pulled out for any reason.  

Be interesting to hear how this one comes out if you are kind enough to keep us updated. I think you deserve compensating in some form but not sure what the offer would be

Hi, thanks for your response. 

Although I did have expenditure - solicitors fees, searches, etc - I'm not too bothered about any of that. The financial hit will really be through the higher interest rate over the 5 years, and I'm frustrated in knowing that even if the property purchase fell through (unlikely), I could have potentially transferred the offer to a different property.

I will certainly update when I know more, I have asked the broker if we can meet up to discuss what happened.

TheJP

ACG said:

Potentially. 
You should have a KFI/ESIS/Illustration (all the same thing, just a different name), section 11 will say what to do if you have a complaint. 

You should have also received a Terms of Business or IDD - this will also confirm where to go to make a complaint. 

Most firms are either Appointed reps of a larger firm - the larger firm would investigate the complaint, or directly authorised in which case they would investigate the complaint themselves. Ultimately though if they reject your complaint you can take it to the ombudsman so it makes no sense to reject it for the sake of it. 


If I were the broker on this and I had made this mistake, I would do you a mortgage now based on todays rates. If your original mortgage was £500 a month on a 2 year fixed rate and the new one is £600 a month, I would offer to pay you £100 a month for 2 years or maybe £1500-2000 as a lump sum. 

It is slightly more complex than that though, as you were never eligible for the HSBC deal to begin with. So it would actually be the cheapest deal at the time you were eligible for. So lets assume the cheapest deal was £510 a month, that would be £90 x 24 (£2160). 

Hopefully that makes sense. 

Thats what I would offer. You might not agree with that and you might want more, you might want less you might want something completely different. Ultimately whoever made the mistake only has to put you in the position you would have been had the mistake not been made, so they do not have to offer compensation on top for example. 

OP did you pay for this service or was the broker fee paid by the lender?

There is no guarantee that even with the correct paperwork being submitted that the application would have been successful so the idea that the broker should pay the shortfall is a little misguided.

If the OP paid a broker fee and if the complaint proves successful that the fee would be repaid. 

ACG

TheJP said:

ACG said:

Potentially. 
You should have a KFI/ESIS/Illustration (all the same thing, just a different name), section 11 will say what to do if you have a complaint. 

You should have also received a Terms of Business or IDD - this will also confirm where to go to make a complaint. 

Most firms are either Appointed reps of a larger firm - the larger firm would investigate the complaint, or directly authorised in which case they would investigate the complaint themselves. Ultimately though if they reject your complaint you can take it to the ombudsman so it makes no sense to reject it for the sake of it. 


If I were the broker on this and I had made this mistake, I would do you a mortgage now based on todays rates. If your original mortgage was £500 a month on a 2 year fixed rate and the new one is £600 a month, I would offer to pay you £100 a month for 2 years or maybe £1500-2000 as a lump sum. 

It is slightly more complex than that though, as you were never eligible for the HSBC deal to begin with. So it would actually be the cheapest deal at the time you were eligible for. So lets assume the cheapest deal was £510 a month, that would be £90 x 24 (£2160). 

Hopefully that makes sense. 

Thats what I would offer. You might not agree with that and you might want more, you might want less you might want something completely different. Ultimately whoever made the mistake only has to put you in the position you would have been had the mistake not been made, so they do not have to offer compensation on top for example. 

OP did you pay for this service or was the broker fee paid by the lender?

There is no guarantee that even with the correct paperwork being submitted that the application would have been successful so the idea that the broker should pay the shortfall is a little misguided.

If the OP paid a broker fee and if the complaint proves successful that the fee would be repaid. 

Nobody has said the correct paperwork was not submitted. 
The issue is that the lender appears to use the lower of the payslips or the P60. So regardless of what paperwork was submitted, this was never going to pass due to the amount of time in the job and the time of the year they started. 

That appears to be the reason given for the application not being accepted. So whilst it could have been something else that kicked it out, to the best of everyones knowledge it is the only reason...