Call for action on home owners who were mis-sold mortgages
Politians are being urged to encourage regulators to speed up claims settlement for thousands of people whose lives have been blighted by mortgage mis-selling.
The Financial Services Compensation Scheme and the Financial Ombudsman have been dragging their feet, according to legaltech disruptor ME Group, which uses technology to simplify complex legal disputes such as mortgage mis-selling.
‘Where lenders can be shown to have breached the rules, or mortgage advisers ripped their clients off in return for big commissions, politicians need to ensure consumers obtain redress without the process taking many months or years,’ said Rob Cooper, the firm’s chief executive officer.
A debate in the House of Commons, sponsored by Charlie Elphicke MP, heard how up to 150,000 people are stuck in expensive mortgages and unable to switch provider, but Cooper says many have also been mis-sold that mortgage in the first place and are due thousands of pounds in compensation.
‘Currently, around 27,000 people who have contacted ME Group have a mortgage mis-selling claim, and of these 14,000 have suffered a financial loss in excess of £20,000. As so often with financial services, the victims are mostly vulnerable families, who are not financially sophisticated, the very people the authorities should be supporting,’ Cooper explained.
He pointed out that said the problem is likely to be much greater, because many people don’t even know they’ve been mis-sold. The Financial Conduct Authority (FCA), which oversees UK financial services, estimated in 2013, before it strengthened mortgage regulation in 2014, that 2.6 million interest only residential mortgages which will mature between 2013 and 2041. Of those, 600,000 will mature by 2020.
Cooper also pointed out that before the financial crash in 2008, large numbers of unsuitable or badly designed interest only mortgages were sold following advice from a mortgage advisor who failed to act in the interests of their client, or where lenders acted irresponsibly in their lending decisions.
After the crash, some lenders breached European Union regulations and overcharged tens of thousands of customers on standard variable rate mortgages to preserve their revenues. In 2012, such practices were found to be unfair, and lenders updated their terms, but they couldn’t apply the new terms to historical mortgages.
‘New technology, pioneered by ME Group, is now able to quickly establish whether the customer has a genuine claim and report back how much they are owed in compensation. The report is then given to a specialist solicitor to pursue the claim on their behalf,’ Cooper said.
‘The technology is a game changer for complex claims like mortgage mis-selling. The great benefit of our service is that we provide our free assessment to enable borrowers to make an informed decision as to how they want to pursue a resolution to their dispute. Now we’d like politicians and regulators to do their bit to prevent customer detriment and step in to help vulnerable people who have been ripped off,’ he added.