A mis-sold mortgage is defined as one that was not sold in accordance with the regulators rules which are intended to protect consumers of financial products and services from being misled or inadequately advised. The rules regulating the insurance industry are complex and a UK mortgage solicitor can help by assessing whether the selling went against these regulations. The root of this problem lies in the fact that these insurance policies depend on the investment of monthly premiums by the life companies creating a sufficiently large fund to pay off the mortgage at the end of the term, however because of the underperforming Stock Market the majority of policies have failed to achieve this and as a result many homeowners have been left with little financial stability.
Mis-Selling Grounds
There are four main grounds which can result in a successful claim for mortgage mis-selling as briefly explained below :-
- Was the insurance product suitable for you?
- Your adviser should have made sure that this method of repaying the loan on the property was the best method for you depending on:
- Your financial circumstances at the time
- Your attitude to risk.
Listed below are some of the reasons why the mortgage may not have been suitable for you:-
The financial advisor wrongly said that this method was guaranteed to pay off the mortgage.
Other options for repaying the mortgage were not discussed fully with you.
The advisor didn’t explain how your endowment would be invested and explain the risks involved.
The advisor didn’t explain that this method of repayment is a long-term commitment that gives a poor return if you cash it in early.
The advisor didn’t check you were comfortable with the risks of stock market investment.
The advisor should have explained that the amount you would get back depended on the performance of the stock market.
The sale didn’t follow the statutory rules
These are some of the reasons why the policy sale may not have followed the financial regulators rules:-
The adviser didn’t explain any fees and charges and how they affect the return you get on your savings.
You should have been given detailed product particulars including charges and cash-in values.
You should have been given detailed information regarding fees and charges and their effect over the longer term.
The advisor didn’t complete a full fact-find during the sales process.
Payments into retirement.
If your mortgage and re-payment arrangements were set up to continue past your expected retirement age, your advisor should have checked that you would have enough income in retirement to continue to pay the mortgage and the premiums. If this wasn’t discussed or you were told not to worry because the insurance would pay off the mortgage before retirement, your mortgage solicitor has grounds to claim compensation.
A practice known as “Churning”.
Any endowment policy you held at the time your mortgage was recommended to you should have been used to back your loan. Any advisor who told you to cash it in, and then sold you another one to replace it, was guilty of ‘churning’. Not only is this appalling advice, it’s also against the rules and gives your mortgage solicitor grounds to claim compensation.
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