The advertising will mostly be aimed at customers with interest-only mortgages.
Craig Lowther, managing director of claims firm Money Boomerang, told The Observer: “A vast number of people who took out interest-only home loans were not subject to adequate checks on the repayment vehicle they have or should have in place. Many will now be facing massive debts come the end of the mortgage term. We believe many people were mis-sold interest-only mortgages and the total value of claims we could be dealing with could be close to that for payment protection insurance (PPI).”
Last week, in the regulator’s final Mortgage Market Review paper, the regulator ruled that lenders will only be able to offer interest-only if a borrower has a credible repayment strategy in place – a move which many lenders have already complied with.
Nevertheless, some lenders have pulled interest-only from the market including Nationwide Building Society and the Co-op, while other lenders have tightened criteria around interest-only lending.
The claims companies The Observer spoke to said they expect to bring claims against both brokers and lenders. The claims firms said any claims rejected by lenders will end up with the Financial Ombudsman Service, while those against brokers who have gone out of business will be referred to the Financial Services Compensation Scheme.
“Although we expect a lot of claims to be against brokers, lenders will be vulnerable where they had in-house advisers who were pushing interest-only loans where these were not suitable or where they had no sufficient checks on the repayment vehicle,” added Lowther.
The Council of Mortgage Lenders said it believes the overwhelming majority of mortgages have been sold and administered in line with FSA standards.
“If a borrower believes they have a legitimate reason to think that standards were not met, then we would urge them to follow up their concern with the broker or kender who sold them their mortgage. If they remain dissatisfied, the FOS can decide where there is a case to answer.”
