You are here: Home - News -

FOS: London and Country told to pay compensation after broker miscalculates deal by £120k

by:
  • 06/02/2018
  • 0
FOS: London and Country told to pay compensation after broker miscalculates deal by £120k
Broker network London and Country has been ordered to pay a client compensation by the Financial Ombudsman Service (FOS) after one of its advisers miscalculated the sums involved in a deal by £120,000.

 

The complainants, referred to as Mr and Mrs T, went to the ombudsman after the mistake made last year, which came to light the day before they were due to exchange contracts.

The clients had wanted to increase the borrowing on their property, and then port this mortgage to a new property, while taking out a buy-to-let loan on the original property.

Mr and Mrs T told the FOS the numbers on the two mortgages had never really made sense to them, and queried them before deciding the broker was the expert.

They had also been told they would be able to raise the money needed without having to pay an Early Repayment Charge (ERC) on the first mortgage.

In the end the complainants took out a new higher mortgage and secured a price reduction on the new property, but incurred an ERC of £5,675, which they wanted L&C to cover.

L&C refunded its fees and offered to pay £300 in compensation.

ERC not fault of L&C broker

The initial FOS investigator ruled that the pair would always have to had to pay an ERC, despite the advice, but said L&C should increase its compensation to £500 on account of the stress caused by the broker error.

However, L&C did not accept this view and wanted to know how much Mr and Mrs T had benefitted after the price reduction on the house.

The final ombudsman decision ruled the price cut was not relevant to the trouble and upset caused by the broker and ordered L&C to pay £500.

In a written decision, ombudsman Belinda Knight said: “Even if they’d been given the right advice from the start, Mr and Mrs T would have ended up paying an ERC to their current lender.

“This means I can’t award them the cost of the ERC.

“But the fact they then suddenly found out they’d have to pay this as well, when the broker had promised they wouldn’t, added to the impact of the broker’s mistake.”

However, the ombudsman said it awarded less compensation than would have typically been the case in the scale of such a mistake, because Mr and Mrs T didn’t push L&C harder for answers when the sums didn’t make sense.

A spokesman for London and Country said: “L&C is committed to ensuring that all our customers benefit from the great service and fee-free advice that we’re well known for.

“That’s borne out not only through our customer feedback but also by an excellent record with the Financial Ombudsman Service.

“However, on occasion we will fall short of our own high standards and mistakes will happen.

“In this case we agreed that our adviser had made an error and were happy to abide by the decision of the Ombudsman.”

There are 2 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.

Read previous post:
Are second charge master broker fees still too high? – Marketwatch

The last week has seen a renewed interest in fees charged by master brokers and packagers for second charge loan...

Close