Advance Mortgage Funding, which trades under Primis Mortgage Network, has been ordered to pay a lump sum to cover interest payments on a portion of the clients’ mortgage and £750 for time used and trouble and upset caused.
The interest part of the award is based on what the pair could be expected to pay on the extra £25,000 they borrowed over thirty years. The rates were set at 1.99 per cent for the first five years and 2.5 per cent thereafter.
Neither the FOS or Primis would confirm what the total compensation paid was.
The clients, Mr H and Mr S, both owned properties and were jointly buying a third.
Mr S let his property to family members and lived together in Mr H’s property with him.
The pair’s plan was that Mr H would sell his property and they would use the equity, savings and a joint mortgage to pay for a joint property purchase.
The network’s appointed representative arranged a mortgage of £610,000 and during that process the clients asked if they were liable for the higher rate of stamp duty at three per cent, which is payable on second homes.
The broker replied that he had checked with a solicitor and that the higher rate was not applicable.
The broker recommended that Mr S register on the electoral roll and amend his bank account address to reflect his place of residence accurately.
The two clients exchanged contracts on their new property in November 2017. The following month their solicitor advised they were liable for the higher rate of stamp duty amounting to about £30,000. By now, they were contractually bound to complete.
The pair therefore increased their mortgage to £635,000 paying a higher rate and increasing their monthly repayment “to a level they aren’t comfortable with,” the Ombudman recorded. They also abandoned plans for a holiday to help fund the additional sum.
Primis’s internal procedure rejected the complaint, arguing that the broker had not acted as a tax adviser, but was simply passing on information.
However, the ombudsman’s adjudicator upheld the complaint. Her view was that “the broker gave the impression he was giving advice on stamp duty. If he wasn’t, he should have made it clear to Mr H and Mr S that they needed to double check with their solicitor.”
The network requested that an ombudsman review the adjudicator’s findings.
However, this was also rejected, with the ombudsman adding: “Advance cannot evade liability for the consequences of the broker’s actions by saying that Mr H and Mr S should have got the right advice from their solicitor; nor for any other reason, for that matter.”
A Primis spokesperson said: “The FOS is available to clients who have experienced difficulties with their financial products or services and, in the interest of best customer outcomes, we absolutely support the provision of this service.
“Our complaint handling process is both thorough and robust and we will fulfil the requirements indicated by the FOS in its ruling.”