Rob Cooper, chief executive and co-founder of litigation financier ME Group, could easily be mistaken for a bouncer.
In fact, before he helped to set up his current business, he was in enforcement in trading standards, although he insists much of his job involved “educating” businesses on what the law was.
Nonetheless, he needs his tough presence as now he is dealing with errant mortgage brokers.
The company assesses claims that come through its website to determine whether they have merit for a claim from the broker, Financial Ombudsman Service or the Financial Services Compensation Scheme.
Many of them he turns down, but for those that appear valid, he passes them on to a law firm, which will take 35 per cent of the final pay out if successful. In return he gets a fee ranging from £250 to £2,500 from this deduction.
Mr Cooper, who also runs private equity company Forbes Ventures, says: “We have never cold-called people and we have never bought in data; all of our advertisements are placed on TV and people come to us.”
More than 90 per cent of the enquiries that come through the website are rejected, based on an initial assessment by an algorithm.
Mr Cooper says: “Looking at past decisions where the complaint has been upheld, based on information from their current lender; as a free-to-use service, we will obtain the advice data and consent, and once we’ve got the full mortgage file back from the client, we will work out whether they’ve been mis-sold.”
Many of these cases refer to clients, often in the near-prime or sub-prime category, who were sold mortgages or remortgaged in the run-up to the financial crisis.
Credit was easy to obtain, and many financially vulnerable people were sold mortgages that they were not in a position to repay – many of which were repackaged into the mortgage-backed securities that caused so many problems.
Mr Cooper says: “It’s about looking at what the adviser should have done, based on the rules. What position the customer would have been in today and comparing [that] to what position they are in because of the independent advice, and working out what the redress should be.
“In the mortgage mis-selling, we end up with two different defendants: either the mortgage broker or a number of the large networks for whom these mortgage brokers acted.
“The mortgage broker would hold liability or the network. In the absence of both, it will end up being with the FSCS.”
So what has been the nature of most of these claims?
Fundamentally it is about brokers not doing affordability checks on their client, and lenders not being in a position to question them. This has now changed with the Financial Conduct Authority’s Mortgage Market Review, hence the more stringent criteria that these clients – many of them mortgage prisoners – are subject to.