Adviser Mark Mackenzie has been told he must give a client back the £500 fee she paid for a mortgage to be sourced, along with a £200 product arrangement fee, after making a promise by text message.
In a text to her adviser, sent in October 2014, complainant Mrs B wrote: “Just double checking, how will it work with the upfront payment? What will happen if for any reason I don’t get the mortgage.”
The adviser replied: “Returned if I can’t source you a mortgage.”
In early December 2014, the adviser emailed Mrs B stating a mortgage could be arranged for £85,000. A key facts document (KFI) was then sent to her.
It said a non refundable £199 booking fee would be payable with the mortgage application, along with a £200 product arrangement fee, although this would be refunded if the mortgage did not complete.
Mrs B sent the adviser a cheque of £399, so the mortgage application could be made.
In March 2015 the adviser contacted Mrs B and said she would not be able to borrow as much as had originally been discussed, but it wasn’t made clear why the lender had reduced the amount it was willing to lend.
In late June and early July 2015 Mrs B contacted her adviser several times. As she did not receive a reply, a complaint was brought to the Financial Ombudsman Service.
An adjudicator said although the KFI said the £500 was not refundable, the text message from the adviser had confirmed it would be refunded if a mortgage could not be sourced.
The Fos felt the product arrangement fee of £200 should be refunded, as the KFI set out that the fee would be refunded if the mortgage did not complete.
The firm did not accept the adjudicator’s view, arguing the adviser fulfilled their brief and the terms of payment by “sourcing and arranging a suitable mortgage deal”.
Reviewing the case, ombudsman Suzannah Stuart said she had not been provided with anything to show that Mrs B received a mortgage offer for £85,000.
“I accept that the KFI said the fee was non refundable even if the mortgage did not complete,” she stated, adding the adviser sent Mrs B a text in October 2014 saying the fee would be.
“It is clear from this text exchange that Mrs B understood the fee would be refunded if she didn’t get a mortgage offer for the £85,000 mortgage she wanted.
“It is not within the adviser’s gift to ensure that the mortgage completed. But, he had committed to either get Mrs B the mortgage she wanted or refund the £500 fee,” read the decision notice.
“I also find that the £200 product arrangement fee should be refunded. The KFI clearly set out that this fee would be refundable if the mortgage did not complete.”