The Advertising Standards Authority has ruled against a claims management company that claimed it could help borrowers get 70 per cent of their home loan written off.
A radio advertisement for Ease Your Mortgage, which was broadcast on 2 April 2017, stated: “Breaking News. Ease your mortgage announces that eight out 10 mortgages have apparently been sold by your lender.
“We believe you may have a legal case if your lender failed to follow correct procedures.
“It will only cost £260 to obtain a full legal opinion confirming if your mortgage was sold or not.
“Planned court action or settlement in your favour could entitle you to write off your current mortgage balance by up to 70 per cent net of fees.”
A complaint was made to the Advertising Standards Authority questioning whether the claim that a mortgage balance could be written off by up to 70 per cent was misleading and could be substantiated.
Samweb (UK) Ltd, which trades as Ease Your Mortgage, said the premise that a consumer could have their mortgage reduced or written off was based on the notion of improperly conducted mortgage securitisation.
Mortgage securitisation is where a mortgage was sold by a lender to a third party.
It occurs where the lender - without the consumer’s knowledge - receives a sum of money at least equal to the value of the outstanding balance of the mortgage as of the cut-off date of the securitisation.
If the third party who the mortgage was sold to did not have the correct legally binding documentation that gave them the same rights as the mortgage lender, then, Samweb argued, there would be no further liability for repayment by the person who took out the mortgage.
As a result, Sanweb claimed this would result in a 100 per cent reduction in the consumer’s mortgage.
Samweb further argued that, in accordance with their discussions with the claims management regulator, the advert stated that any future reduction of the mortgage would be “up to 70 per cent net of fees.”
This figure was based on the 25 per cent plus VAT “no win no fee” agreement that a consumer would enter in to if a mortgage borrower chose to use the company’s services.
The Advertising Standards Authority upheld the complaint on the grounds the advert implied if the claims management companies assisted the individual they would see their mortgage reduced by up to 70 per cent.
A spokesman for the ASA said: “We understood from the evidence that it was only theoretically possible that where a mortgage lender had failed to follow the correct procedure when securitising a mortgage, that could result in the balance being written off, and that this had not yet been proven in court.
“We acknowledged that the ad used words such as ‘believe’, ‘may’, ‘planned court action’ and ‘could’. However, we considered that these words did not make it sufficiently clear that what the advertiser offered was based on a theoretical possibility only and was not a demonstrably successful claim service, i.e. they had not yet successfully written off a consumer’s mortgage balance.”
The ASA ruled consumers would not understand what was meant by “up to 70 per cent net of fees” and that it was not sufficiently clear that the reduction of the mortgage was 100 per cent and that the remaining 30 per cent of the outstanding mortgage balance would be owed as a debt in fees.”
The authority also ruled the overall impression created by the advert was that for just £260 the advertiser could help a consumer reduce their mortgage by up to 70 per cent.
emma.hughes@ft.com
