Mortgage Broker Complaint

TheJP

ACG said:

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... 

So why are you saying the broker is liable to make up the difference in the OPs monthly payments?

ACG

If the lender has not made a mistake, the broker has. 

HSBC are taking the lower of P60 or payslips as proof of income. That is their criteria, it is in writing on their website. 
The application was always going to fail affordability. Its not like the underwriter has reviewed the case and decided to be more cautious because there is something they do not like. 

That means either the lender gave incorrect information resulting in an application or the broker applied to the wrong lender. 
Since then, rates have gone up. 

If the applicant applies now, it will cost more money. 

Thats not the applicants fault. Its either the lenders or the brokers, which in my opinion, the company that made the mistake has to foot the bill. 

JMA74

TheJP said:

So why are you saying the broker is liable to make up the difference in the OPs monthly payments?

Different brokers will use different systems but the one that I use to log my advice has a check box to confirm that I have verified through lender criteria that the client qualifies for the mortgage that I have recommended.   If i submit an application to a lender who would have never done the case in the first place then thats a mistake.  Mistakes happen and thankfully over the last few years its been a lot easier to recover from mistakes as rates have been fairly static or going down so there has been little to no loss.

In this case rates have gone up between the original application (that should have never been submitted) and whenever a new application goes in.   
The client will be directly impacted by the broker applying to the wrong lender. 

Its not the lenders fault the broker gave them an application they clearly state they wouldnt do, and its certainly not the clients fault, they go to a specialist to avoid this situation in the first place.   Someone has to cover the increased costs that the client will now have to pay due to rates increasing.  It will likely be the broker paying this in some form. 

Example:
HSBC Rate - 3% 
Actual lender who would have done the mortgage originally - 4%
Lender who will do the mortgage now - 5.7%

The client is 1.7% worse off.  They would never have got the 3% rate with hsbc so its not fair to compensate to this level.  You put the client back in the position they would have been in if the mistake hadnt happened. In this example its to get them the 4% rate.

K_S

@123imp Sorry to hear about the problems with the application.

I'll echo what's been said above. Based on the information in the thread, it looks like an error on the broker's part due to incorrectly interpreting HSBC criteria.

To me, it's a bit harder to quantify the impact of the error as that would depend on the specifics of your contractor income, what you go on to do, etc.

123imp

ACG said:

If the lender has not made a mistake, the broker has. 

HSBC are taking the lower of P60 or payslips as proof of income. That is their criteria, it is in writing on their website. 
The application was always going to fail affordability. Its not like the underwriter has reviewed the case and decided to be more cautious because there is something they do not like. 

That means either the lender gave incorrect information resulting in an application or the broker applied to the wrong lender. 
Since then, rates have gone up. 

If the applicant applies now, it will cost more money. 

Thats not the applicants fault. Its either the lenders or the brokers, which in my opinion, the company that made the mistake has to foot the bill. 

Hi,

Just wanted to provide an update on the complaint to the Mortgage broker.

They responded to me with a phone call a few days after the complaint was submitted, and they were not happy. They basically said I was way out of line as they had put a lot of time and effort into my application, and not received any payment. They said that the criteria for contractors on HSBC's intermediary website was just guidance, and it would be ridiculous to think that they wouldn't asses the application based on the last 12 months earnings. They said they weren't to blame, and sometimes lenders turn down applications for a whole host of different reasons, and there was never a guarantee of getting a mortgage offer. They said sometimes you fulfil the criteria but don't get an offer - I pointed out that by the criteria on the website I didn't fulfil the criteria - to which they said something along the lines of "overseas underwriters following the letter of the law". They said multiple times that they didn't have my P60 before the application was made, to which I gave them the date and time of 2 separate emails in my Outbox which were sent before the application date. I asked that if they were adamant there were no issues with what had happened, could they provide a reply to the complaint so I can then go to the Financial Ombudsman in 7 weeks time. They said they would speak to HSBC and get back to me at some point. 

More than anything, they just kept repeating how much they were out of pocket from the amount of time they had spent on the application.

ACG

What they are saying is correct, in that fitting criteria and passing the credit check does not mean you will get an offer. 
BUT going off your posts, you were turned down because of affordability due to how HSBC assess affordability. We literally found the problem in what? 10 minutes? 

I think I said in my original reply, if it was just underwriters discretion then yes 100% it is just one of those things. But that is not the case here (going off what you said). 

They may be unhappy because they are out of pocket due to the time put in, but if thats the case they should be annoyed at themselves. 

(not wanting to sound condescending) Well done for pushing it and asking for confirmation of the rejection for the ombudsman. 

123imp

ACG said:

What they are saying is correct, in that fitting criteria and passing the credit check does not mean you will get an offer. 
BUT going off your posts, you were turned down because of affordability due to how HSBC assess affordability. We literally found the problem in what? 10 minutes? 

I think I said in my original reply, if it was just underwriters discretion then yes 100% it is just one of those things. But that is not the case here (going off what you said). 

They may be unhappy because they are out of pocket due to the time put in, but if thats the case they should be annoyed at themselves. 

(not wanting to sound condescending) Well done for pushing it and asking for confirmation of the rejection for the ombudsman. 

Thanks. I felt as though we were just going round in circles. I kept asking them to explain why I would have been eligible to borrow the amount applied for, when I did not meet the criteria set out on the HSBC intermediary page. They kept on saying I did match the criteria, the criteria was just guidance that wasn't really adhered to when assessing, and that sometimes lenders reject applications - which I already understood prior to applying.

I really do see it as black and white now, and I'd hope the Ombudsman sees it the same if it gets that far: -

1. The criteria is set out on the HSBC intermediary website, and says they will asses my application based on my previous P60.
2. The broker had my P60 prior to submitting the application.
3. The underwriter said I wasn't eligible to borrow the amount I had applied for because of the earnings on my previous P60.

Seems pretty clear?

JMA74

yeah this sounds like trying to fob you off.  Lenders do bend criteria occasionally but someone like HSBC it is unlikely especially when the criteria is so clearly spelled out.  Tends to be for smaller lenders who arent working off an approved criteria 

If they submitted your application hoping for criteria to be bent then they should have warned you that you dont technically fit criteria but they will try to argue the case.  Or they should have some evidence that they spoke to someone at hsbc who confirmed they would take a view.  
If i had this and wanted to get a different calculation I would have sent it to my business development manager who would have sent it for a pre-underwrite.  Only then would i submit an application.   

Re them being out of pocket.  Irrelevant.  Their decision to not charge you a fee on application.  I had a case collapse this week due to survey that was worth nearly £3k in my pocket.   Can you imagine if the client called me to tell me they were pulling out and I started whinging about not earning anything from the case.  

Ask them to reply in writing btw. Their attitude so far doesnt fill me with confidence that they wont backtrack later.   If they try call after you ask them to put it in writing you can just ask again and hang up. Email them with 'thanks for the call, as confirmed i would like all correspondence in writing so can you please respond to my complaint in writing' 

ACG

I think they are playing a little fast and loose with the term "guidance", no criteria is a guarantee. 
But it is interesting that they said you were declined because of the bit that is outside of criteria/guidance. 

If you are submitting a case that is outside of criteria, you have someones name on file who told you it would be ok. 

123imp

ACG said:

I think they are playing a little fast and loose with the term "guidance", no criteria is a guarantee. 
But it is interesting that they said you were declined because of the bit that is outside of criteria/guidance. 

If you are submitting a case that is outside of criteria, you have someones name on file who told you it would be ok. 

I'll have to see what they come back with in terms of response. They didn't say that they had sought advice on the application, just that we had sat down and gone through the criteria prior to the application being submitted. Which may have happened, although I wouldn't have understood it at the time anyway.