Mortgage mis-selling claims a potential threat

Nia Williams

May 7, 2013

His comments come hot on the heels of the failure of a negligent advice claim against a mortgage brokerage in a recent court action.

The case related to buy-to-let remortgage advice that Darren Flicker, a broker with Savills Private Finance, had provided to Martin and Anne Bateson in 2005. The Batesons alleged that Flicker’s advice caused them to lose their seven-property portfolio and build up debts of £170,583 to The Mortgage Works.

Whilst Judge Gosnell found that Flicker had been in breach of duty, he concluded the remortgage was not to blame for the loss of the properties – it ”was actually the failure to pay the instalment payments by the claimants” due to their own financial difficulties.

He said that because the Batesons had not studied the terms and conditions of the mortgage and did not take their solicitor’s advice regarding the loan, if he had found Flicker guilty he would also have “to find the claimants guilty of contributory negligence”.

“We’ve been here before,” explained Goldsmith, senior partner at Goldsmith Williams.

“I well remember being lambasted in the press when certain claims management companies brought unmeritorious and speculative claims regarding unenforceable consumer credit agreements.

“At the time I maintained that these actions had no real substance; however a number of companies made a lot of money from taking up-front payments from hard pressed borrowers who ended up with nothing when lead cases were deflected by the commonsense decisions of the courts.

“I’m sorry to say that I think we’re heading in the same direction with mortgage mis-selling. Early court cases such as the action the Batesons took against Darren Flicker show that it will be difficult to conclusively prove mortgage mis-selling. However, despite this we’ve already seen a number of claims management companies embark upon substantial publicity campaigns.

“I fear these campaigns will result in a spate of unfounded claims for mortgage mis-selling which risks the reputation of the claims industry as a whole and, more importantly, could raise borrowers’ expectations unrealistically and cost them money they can ill afford to pay.

“Whilst the conclusion of Judge Gosnell can be seen as somewhat reassuring to the mortgage industry the fact remains that more and more time could be taken up for mortgage introducers in dealing with these spurious allegations of mortgage mis-selling. It seems to me that the lessons of the past have been ignored.”

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