Speaking at the Mortgage Solutions Mortgage Vision event, when asked if any Pure Legal claims had been upheld or paid out, Sinclair (pictured) said he was aware of just one claim which was settled out of court after the legal firm walked away.
The damages for this claim are yet to be awarded.
He also noted another case where “the insurer stopped it from going to court, but the payout damages were negligible, and they came to an agreement with the firm that was taking the case.
“There have been no decisions as yet upheld by a court having gone through the full case,” Sinclair said.
Sinclair asked brokers to notify AMI of any cases that have gone to court so that it can co-ordinate an overall approach on the issue. This was seen as important particularly as some firms still struggle to acquire professional indemnity insurance owing to concerns about possible mis-selling.
“We’ll deal with any case where there is genuine customer mis-selling or any harm, but we will not accept vexatious claims from people who are just trying to make money for themselves,” Sinclair said.
In 2018, the Financial Conduct Authority (FCA) warned that interest-only borrowers could risk losing their homes if they had no repayment plans in place at the end of their term.
This resulted in a drop in take-up of interest-only mortgages and a number of complaints that the mortgages had been mis-sold.
Speaking with the regulator
Sinclair is to begin talks with the FCA and Treasury, with a view to encouraging insurers to overlook “legacy issues” on mis-sold mortgages and to provide cover.
“I have my first meeting with the FCA on Friday to go through with them exactly what the position is, what the issues are, and to make sure we’ve got a way of taking this forward to help the insurance market understand that the risks in this are hopefully minimal,” he said.
However, Sinclair cautioned that brokers moving into new product areas or markets, such as later life mortgages or bridging, increased insurers’ reluctance to service the mortgage market.
He added that the FCA’s recent study on the later life market – which suggested not all firms were giving advice in the best interests of clients – did not help.
“Insurers will be much more nervous about taking that on,” he said.