Mortgage adviser negligence - Lost Deposit - Options?

  • Filter
  • Time
  • Show
Clear All
new posts

    Mortgage adviser negligence - Lost Deposit - Options?


    The FOS (Financial Ombudsman Service) has refused to consider our complaint of severe negligence by the mortgage adviser that has caused us to lose a deposit on a new-build BTL. What are our options at this stage? Since the FOS is not going to consider our case, is the only option to go down the legal route?

    Background : I have read, and I understand BTL is an unregulated product, so arranging BTL lending is also not covered by the FCA and the FOS complaint procedure. But when we approached the adviser, they asked us to approach the FOS. Also, it seems completely unfair and incorrect that business, portfolio or individual landlords have absolutely no recourse or protection from mistakes committed by the mortgage adviser. In our case they submitted our application very late, did not inform us that they didn't have access to a wide panel of lenders or could help provide bridging finance, and kept losing our documents.

    Appreciate your help.

    Many thanks

    Your conveyancing solicitor should pay the deposit on exchange of contract to builder's solicitor.,

    Mortgage advisors only charge a fee after successful mortgage application to mortgage lender.

    You may be able get back your fee by online claim in the small claims court .


      This is clearly a very unfortunate situation that the OP has cited.

      Whilst it is true that BtL’s are Unregulated the vast majority of brokers who themselves are Appointed Representatives of an Authorised Network Conduct their advisory services in the same way that they would conduct themselves when advising on Regulated Mortgages; what this means in practice is a requirement to issue to the applicant(s) an IDD ( Initial Disclose Document) which sets out the basis of the advice being given and the extent of their access to the mortgage market. Unfortunately there are indeed brokers who are not Appointed Representatives of a Network or indeed Directly Authorised by the Financial Conduct Authority but whose activity is restricted to arranging any type of Non Regulated Loans because they do not possess the necessary qualifications which otherwise would permit direct access to the Whole of Market. For many their expertise is good but often have to deal via Master Brokers who assume the negotiations and processing of such types of applications. Judging from the comments made the IDD may not have been issued or little of no attention was given to its contents.

      With regards the Loss of Deposit, these monies are normally made in two parts, a Holding Deposit of some notional amount and the balance once Contracts have been exchanged and your legal representatives have satisfied themselves on the legitimacy of Title and have had instructions from the lender to act following approval of the clients loan application. It is rare that a solicitor would undertaken an exchange of contracts without specific authority to do so by the client when funding is still in the pipeline. Clearly from the developers point they had issued documents covering the sale and the deadline that needs to be met if the initial Booking Deposit is not forfeited, from experience House Builders do allow a degree of flexibility in this should the mortgage be taking longer to be procured by the purchaser.

      At the very best you might as Gordon999 has said have a slim chance of making a claim against the brokerage through the Small Claims Court but any settlement is limited to £5000. As a final point if the broker had indeed issued an IDD you will have been given the name of the Compliance Complaint unit of the Network which the brokerage was Authorised .

      I am indeed sorry that you have had a very bad experience with the broker, there are thousands of Authorised brokers throughout the country whose conduct is closely supervised by their respective Compliance Supervisors and who by virtue of their qualifications do invariably have access to the Whole of the Market BUT it is indeed worth mentioning that not every broker is fully involved and knowledgeable in anything complex associated with Portfolio BtL and Short Term Bridging Finance , so for anyone in a similar situation should ask these pertinent questions going forward.


        How could even the most incompetent mortgage broker cause someone to lose a deposit?

        The only option is to "go down the legal route".

        The small claims limit is now £10,000.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


          Thanks JP for the update on the limit, appreciate the info. I note that £5000 is still the max in Scotlandand £3000 for Northern Ireland.


            Thank you all for your responses. Was definitely not issued a IDD and never once did they present us anything our options. It was Bank X 2 year and Bank X 3 year only. Nothing more. And they lost our documents.

            Overall, do think that this is a black hole. Seems completely incorrect that the FCA/FOS covers institutional clients under MIFID but will not cover individuals or portfolio landlords who are investing their money in property. Speaking of which, can someone explain what a CBTL product is?


              A consumer BtL in its simplest form is where someone wants to let a property to an immediate member of the family, because of the relationship it raises issues over matters relating to the issuance of a Notice to vacate if the relative failed to pay the agreed rent, so a lender will take full account of the owners actual income and offset all financial liabilities to determine affordability as opposed to the market rent being the main determinant. Such guidelines are set by the FCA and it is only a minority of lenders who will accept such types of application.
              Whilst it mayprove to be a long shot , the broker must have shown his credentials showing his status as a broker, Directly Authorised or Appointed Representative, in both cases you might wish to register a formal complaint, they in turn are obliged to undertake an audit of the file and have the right to penalise the broker and in extreme cases deregister them and notify the FCA of their actions which in turn would make it difficult to obtain authorisation with another firm. If however the broker wasn’t Authorised and was simply a commercial broker I doubt whether any complaint would provide a satisfactory solution.
              It does irk me that there are such brokers who act in such a manner.

              Best ofluck.


                Even though the broker was less than competent (to say the least), how did them losing some documents cause the loss of a deposit?

                Not issuing a Disclosure document is not great, but it doesn't cause a delay.
                Losing some documents causes a delay, but it does happen, and people deal with it.

                There's something missing.
                My own broker isn't the most responsive (and I'm not the speediest client, either), but it's never got in the way of a purchase - it might have annoyed the seller a bit.
                When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


                  Is this an off-plan purchase?


                  Latest Activity


                  • Notice served , rent arrears increasing
                    by Propertygoesup
                    I have had a solicitor serve s21 notice for me on a tenant who is now 3000 in arrears (over 3 months) . Notice asks tenant to leave early Feb.
                    ​​​​​​I have asked solicitor whether I can offer tenant any kind of deal on waiving rent , which they said I can in writing.
                    I'm here...
                    16-12-2019, 10:15 AM
                  • Reply to Equity release
                    by loanarranger
                    Equity Release loans do not extend to Buy to Let Mortgages given that such borrowings are deemed Non Regulated by the FCA Whilst Residential Homeowner Loans are Strictly Regulated and why only Brokers with the relevant qualifications are permitted to advise and arrange such facilities with lenders.
                    12-12-2019, 04:41 AM
                  • Equity release
                    by Bricko7
                    Hi everyone.

                    So I have a house with about 90,000 of equity in it, which is about 70% of the value. One option I have is to release the equity as it is rented out and I don't want to selll.

                    I am half way through a 2 year fixed term on the mortgage. So if I release equity will...
                    10-12-2019, 04:22 AM
                  • Reply to Equity release
                    by Gordon999
                    If you are part way through an existing fixed term mortgage, you should want till nearer the end of the term before re-mortgaging.

                    Equity release is only for those who have no income to pay interest on a normal mortgage loan.The interest rate charged is higher because the lender has...
                    11-12-2019, 02:54 AM
                  • Reply to Equity release
                    by loanarranger
                    Firstly are we discussing obtaining a further advance from the current lender , obtaining a second charge mortgage from a third party provider , I am a little confused; I am also assuming that the present loan is a Non Regulated mortgage as opposed to a Residential Homeowner Mortgage but where the property...
                    10-12-2019, 07:59 AM
                  • Reply to Borrowing against property to invest in shares etc
                    by theartfullodger
                    Indeed: I have experinced B0E interest rates hitting 17% (yes you read that right, under Thatcher...) and a price collapse during divorce divestment - both were ...err... painful: (the money position, not the divorce..)...
                    09-12-2019, 15:52 PM
                  • Borrowing against property to invest in shares etc
                    by Clulass
                    New here, just wondered what people in property thought about borrowing against a BTL property, to invest in shares (either plcs or start ups) - so relatively risky but big growth potential.

                    Is it a totally crazy idea, or perhaps not, if you can afford the interest payments, and you accept...
                    17-10-2019, 08:40 AM
                  • Reply to Borrowing against property to invest in shares etc
                    by doobrey
                    Depends on circumstances, I guess. I was talking to brokers about extracting equity from my property for investment and I was being told no because it would be viewed as a good money-laundering strategy (i.e. buy for cash -> remortgage) and therefore they would be on the wrong side of AML rules....
                    09-12-2019, 15:09 PM
                  • Retrospective sub-division of a HMO and financing/refinancing strategy
                    by GaryE
                    I have 5 self-contained bedsits and 1 x 1 bedroom self-contained flat all contained within a single HMO property. There is a shared kitchen and lounge and I have a HMO license and certificate of lawful development (change of use C3 to C4). My strategy is to wait 3 more years and get retrospective planning...
                    04-12-2019, 15:20 PM
                  • Reply to Retrospective sub-division of a HMO and financing/refinancing strategy
                    by loanarranger
                    Can I make a slight correction Gordon to your last post and without wishing to sound clever;you are indeed correct regarding the possibility of the lender not allowing any flats to be extracted from the title but the possible exception is if the value of the Freehold plus the value of the remaining...
                    07-12-2019, 14:13 PM