Mis-sold Mortgage & Payment Protection Insurance
If you were advised to take out an investment designed to pay off your mortgage when it finished, did you later discover that you would not be paid out enough? If so, this could constitute a mis-sold policy. Contact us today to find out more.
Interest Only Mortgages
If you were only paying the interest on your mortgage each month, then the advisor should have made you aware how you would repay your mortgage when it finished. If your broker or lender didn't discuss this with you or give you examples of the cost of a Capital and Repayment mortgage compared to the lower costs of an Interest Only mortgage, then this would be an example of mis-selling. Furthermore, was it explained to you that you may have to switch your mortgage to a Repayment mortgage rather than relying on rising house prices? If not, then this could also constitute mis-selling.
Remortgaging to clear your debts
If you were looking to consolidate your debts, were you advised that it would be cheaper for you to put all your loans, credit cards and finance onto your mortgage? If yes, you could be exchanging short term debts for a long term debt by adding it to your mortgage. Did the adviser explain to you that although you would be lowering your monthly outgoings initially, you may well be lengthening the term of your debt and vastly increasing the amount of interest that you would be paying? If not, this could be constituted as mis-selling.
Household budget analysis
Were you asked to complete a household budget analysis? Were you asked how much your monthly income was, and what your monthly outgoings were? Did they work out with you how much money you had left over each month after paying all your bills ie your disposable income? If this wasn't done, you may have unknowingly over-committed yourself to a mortgage that you couldn’t afford.
Self Certification mortgages
Were you asked to provide evidence of your income, for example, payslips or audited accounts that could prove your income? If not, were you encouraged to take out what is known as a ‘Self Cert’ or ‘Fast Track’ mortgage, where you didn't need to prove your income? These mortgage products paid far higher commissions and were very popular among some brokers for that very reason. If this applied to you, your mortgage may have been mis-sold.
Mortgages running past retirement
Is your mortgage due to run past your retirement age? Was this pointed out to you? Did your broker or lender discuss how you would meet your mortgage payments once you were retired? A good example of this would be if someone takes a mortgage out for 20 years at the age of 50. The average age of retirement is at 65, which means there will be 5 years left to pay on the mortgage. If at the time of agreement, the adviser didn't take into consideration whether the customer could afford to make the payments after the age of 65, then the customer may have been mis-sold their mortgage.
High broker fees
Did you pay unreasonably high fees to the broker or advisor that arranged your mortgage? Were you made aware what the fees would be? Were they added to your mortgage without you knowing so that you're now paying interest on them every month?
Payment Protection Insurance (PPI)
Payment protection insurance (PPI) is an insurance product sold alongside credit cards, loans and many other finance agreements. It’s meant to ensure that payments are made if the borrower is unable to make them due to sickness or unemployment. But huge numbers of policies were mis-sold because the policyholders would never have been able to claim on the insurance.
In 2005, Citizens Advice issued a so-called super-complaint to competition watchdogs about what it described as a ‘protection racket’, starting a series of events that led to the compensation payments to consumers and sales of some types of PPI being banned. Most people don’t know if they were mis-sold PPI or not. Regulators have recognised this and now recommend that if there’s a chance you had PPI, you should make a claim ahead of the 29 August 2019 deadline.
What does Plevin mean for PPI compensation?
The Financial Conduct Authority (FCA) has put rules in place for how firms should handle claims in the wake of the Supreme Court ‘Plevin’ ruling, which looked at cases where providers earned a high level of commission from PPI and customers weren’t told about it. The FCA now says that if the cost of your PPI was made up of more than 50% commission and you weren’t told this, you should get the difference back plus interest. But these rules will only officially come into effect on 29 August 2017.
PPI providers will be required by the regulator to write to all previously rejected complainants who are eligible to claim in light of the Plevin case, to explain the new grounds for claims. As bank loans with PPI typically had 67% commission and banks almost never mentioned it, this means millions more people are owed billions more pounds. We believe that if you’ve had a PPI claim rejected in the past, you should resubmit it to your PPI provider and can ask them to check for undisclosed high commision, as realistically there’s little to no way you could have possibly known about the amount of commission on the product you were sold. It’s important to remember that you’ll only be compensated the percentage difference over 50%, so if your product was 67% commission you’ll get the 17% back. In many cases this will probably mean compensation in the hundreds, rather than the thousands.
How much PPI compensation will I get?
Understandably you want to know how much you’re owed, but the sums involved can be tricky. Regulators require your PPI provider to put you back into the financial position you would have been in if you had never had PPI.
There are three sums that make up how PPI compensation is calculated.
First, the actual cost of the premium, this could have been added as a regular monthly charge on your loan or credit card repayments.
Second, how much interest you were paying on the premium. This can add up quickly, especially if you had a product with compound interest.
The third and final sum is simple interest of 8% a year on the combined premium and interest for the time you had the policy.
When did PPI mis-selling start?
There's no specific start date, the problems of mis-selling have been around for a long time. Claims generally start on policies mis-sold from the 1990s and in some cases even earlier. The financial regulator started fining PPI companies in 2006, but it wasn't until 2011 that we started to see compensation payouts happening on a larger scale.
If any of the above applies to you then you may have a case of mis-selling and you might want to contact us to start your claim today!
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"Fantastic result! Thank you everyone for all your help and hard work. I am thrilled to bits with the compensation I have received and in future if I ever buy a house again I will definitely do my research instead of being told what to do by a greedy broker!"
Imran Rashid, Birmingham
"My son did not even believe he would qualify to claim his PPI money back but after I persuaded him to go ahead with the claim he is now overjoyed as he received just under £3,000 back. Thank you Consumer Rights UK."
Lauren Pearson, Liverpool