The ombudsman said: “I believe the adviser ought to have highlighted the potential repayment risks more specifically to them.
“The documentation showed that income from the sale of the investment property was the recorded means of repaying the debt.”
The ombudsman thought the adviser did not have reasonable grounds to conclude the repayment strategy was suitable or appropriate and ordered Intrinsic Financial Planning to pay £29,000 to represent the additional borrowing taken on an interest-only basis used to fund the deposit, alongside interest payments, the fees originally paid and £750 for the trouble.
In the third case, which was upheld in February, the ombudsman ordered Intrinsic Mortgage Planning to repay the difference between the additional amount the client borrowed on an interest-only basis plus £750 for the client’s trouble.
The ombudsman thought “suitable” advice in all three cases would have been to take out a repayment mortgage as the “risky” investment in Harlequin was not a suitable repayment plan for an interest-only mortgage.
In all three cases, the ombudsman said a repayment mortgage for the same amount would have now been paid off.
Recent Fos cases about Harlequin have typically involved customers who invested in the property through self-invested personal pensions, but it is thought consumers were also told to mortgage their properties in order to invest in the scheme.
|Number of cases handled by the Fos involving mortgage advice relating to Harlequin|
|Sep 18 - Sep 19||Sep 17 - Sep 18||Sep 16 - Sep 17||Sep 15 - Sep 16||Sep 14 - Sep 15|
Intrinsic rebranded as Quilter Financial Planning in July 2019 after its parent company completed the acquisition of Lighthouse but Quilter did not want to comment on the Fos decisions as the cases pre-dated the acquisition of Intrinsic.
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