The complaint is against a Scottish IFA through an online application where the applicant did not disclose a trust deed. A mortgage promise was issued by a lender online and the client concluded missives to buy. Seven days before the settlement the lender pulled out as it had discovered the trust deed. The adviser was given seven days to source a new loan and to have the loan papers on the lawyer’s desk.
Unknown to the adviser the client arranged an expensive bridging loan and one month later secured a loan with a different lender, only marginally better than the replacement loan the adviser arranged. The client is now claiming the difference between what would have been the initial lender’s interest and the second loan over the life of the mortgage, the whole of the bridging loan costs, and legal fees.
Evan Owen, director of the IFA Defence Union, warned brokers. “Be ultra careful out there when doing business online, do a credit check first and make sure you are looking at the best rate available for the client’s circumstances,” he said. “If you arrange adverse credit or non-conforming loans with ‘specialist lenders’ and the client can prove later that he could have obtained a standard loan from a high-street lender, you are in a world of hurt.”
Alasdair Sampson, partner at Drummond Miller WS Solicitors, issued a specific warning concerning advising on non-conforming mortgages. He said: “In my view non-conforming loans are prime and fertile ground for complaint. Intermediaries may not have had sufficient or reliable income/assets data from the client, or the data may be unsubstantiated to give the same reasoned advice one would give relative to a prime loan.”
