Mortgage advisory firms should take careful note of a recent judgement from the Financial Ombudsman Service (FOS), which highlights just how far their duty of care to their clients goes.
Hampshire-based firm Adviser Business Solutions Ltd (ABS) must now pay a five-figure sum in compensation after neglecting to advise Mr and Mrs P of the procedure to be followed when seeking to ‘port’ their mortgage.
The clients engaged the firm to advise them on an arrangement whereby their mortgage would be transferred to their new property. However, Adviser Business Solutions did not tell them that a refund of the early repayment charge would only be granted if they completed the sale of the previous property within a three-month period. As it was, the transaction was only completed one week after this deadline.
Ombudsman Melanie McDonald rejected the firm’s argument that the clients’ solicitor should have highlighted this issue.
In her judgement, Ms McDonald said:
“Mrs and Mr P say, and I accept, that, had they known about the deadline, there is no reason why they couldn’t have complied with it and brought completion forward by a few days.
“I don’t think it was up to Mrs and Mr P’s solicitor to warn them about the three-month deadline.
“As I have said it was not immediately apparent from the redemption statement and in any event her role was to manage the legal side of the transaction.
“Arranging the mortgage and making sure that the objective Mrs and Mr P had identified at the outset was met was down to ABS.
“Having identified Mrs and Mr P’s single requirement in its letter of 26 April, I think it was reasonable to expect that ABS would take whatever steps were necessary to ensure it was met.”
The firm has therefore been ordered to refund the early repayment charge of £13,362.25 to the clients, plus an allowance for interest of 8% per annum.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.