Adviser who withdrew £500 offer told to honour it

The client, referred to as Mr M, complained that Knott Another Mortgage Adviser Limited (KAMA) told him he would be able to reduce the amount he wanted to borrow, up to five days before completion on 20 March 2017. 

But when Mr M tried to reduce the mortgage amount on 13 March he was told it wouldn’t be possible as his solicitor had already requested the funds.

KAMA argued it had withdrawn its offer to pay Mr M £500 as it did not think it should be "held responsible for financial loss for internal systems and delays at lenders following recommendations of lenders as a regulated intermediary".

KAMA hadn’t told him that it would be problematic if he wanted to change the amount after his solicitor had requested the funds.Suzannah Stuart

The ombudsman ruled assuming Mr M's solicitor knew that he might want to change the amount he was borrowing shortly before completion, it shouldn’t have requested the money from the lender until Mr M had confirmed the amount he wanted to borrow.

But he also said he felt KAMA should have made Mr M aware of the restrictions around late requests to change the amount of borrowing. 

The ombudsman said that if Mr M had been aware, he could have told his solicitor to request the funds once he had confirmed how much he wanted to borrow. 

As a result the ombudsman said it was unfair that KAMA had withdrawn its offer to pay Mr M £500 and told the mortgage adviser to cough up that sum of cash. 

Ombudsman Suzannah Stuart said: "KAMA hadn’t told him that it would be problematic if he wanted to change the amount after his solicitor had requested the funds. 

"KAMA should honour the offer it made to pay Mr M £500 for the trouble and inconvenience he experienced as a result of not being able to reduce the mortgage amount before completion."

The lender allowed Mr M to repay the additional money that he did not require without charging him a penalty but it also said he could not make a further penalty-free overpayment toward the mortgage that year. 

Mr M complained to KAMA, which initially offered to pay Mr M £500 for the trouble and upset this matter had caused him. 

But the firm later withdrew this offer, so Mr M complained to the Fos. 

emma.hughes@ft.com