Interest-only mis-selling hots up
In a report by The Observer online, several claims management companies have revealed they are soon to launch websites and television advertising campaigns targeting borrowers who think they may have been mis-sold mortgages.
Speaking to The Observer, Craig Lowther, managing director of claims company Money Boomerang, said the total value of claims of mis-sold mortgages could be close to that for payment protection insurance.
He said: “A vast number of people who took out interest-only home loans were not subject to adequate checks on the repayment vehicle they have or should have in place and many will now be facing massive debts come the end of their mortgage term.”
The claims companies The Observer spoke to said they expected to bring claims against both brokers and lenders, though it seemed likely most would be against brokers.
However many have now been shut down by the Financial Services Authority or have ceased trading so redress will have to be sought via the Financial Services Compensation Scheme.
Lowther added: “Although we expect a lot of claims to be against brokers, lenders will be vulnerable where they had in-house advisers who were pushing interest-only loans where these were not suitable or where they had not made sufficient checks on the repayment vehicle.”
Tim Brookes, who runs missoldinterestonly.com, told the paper he has seen his website rapidly climb in Google’s rankings due to increasing numbers of people searching for information on mis-sold loans.
However his company has not had any successful claims for interest-only loans but had some successes with other mortgage claims.
He said: “Self-certification is one area where we have seen customers being badly advised. Lenders and brokers were lazy and told people to take out these loans when they could have got a better loan on the high street.”
Lowther would expect successful claimants to be able to claim back all the payments they would have made towards a loan had that loan been taken on a repayment basis, plus an additional 8% interest.
But the Financial Services Ombudsman told The Observer that a successful claim does not mean a claimant would get all the mortgage payments back.
A spokesman said: “We would also look at the responsibility of the borrower to check the details of their own mortgage in each case and any redress would reflect that.”