Complaints firm expects mortgage-related claims to soar

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Complaints firm expects mortgage-related claims to soar
The firm has reported a rise in complaints related to advice over two-year fixed rate mortgages (Tadeusz Ibrom/Dreamstine)

A significant jump in mortgage-related complaints against advisers and brokers is expected this year, according to a specialist consultancy firm.

Jencap Partners, a firm that helps Financial Conduct Authority registered firms manage customer relations and redress solutions, has said it is already seeing a noticeable increase in queries from brokers.

Speaking to FTAdviser, Jencap Partners director Tim Jenkins, said mortgage-related complaints normally make up about 5 per cent of the firm’s caseload. 

However, given the rapid rise seen in interest rates, Jencap is now predicting that mortgage-related complaints will rise to 15 to 20 per cent of its workload.

A large part of this will be in relation to two-year fixed rate mortgage deals, Jencap expects.

“As a specialist consultancy in complaints management, we are seeing an increase in enquiries from mortgage brokers, where their clients have raised the issue of having taken out a two-year fix rather than, say, a five-year fix, meaning they will be exposed to higher interest rates sooner,” Jencap’s managing director John Bull said.

“So far, the larger, more active claims management companies haven’t rolled out their marketing campaigns at full speed as they are likely still making money on mis-sold pensions, but the number of mortgage complaints and claims will inevitably increase, regardless of whether they have any merit. 

“At some point soon, we may see a more concerted campaign from the large claims companies targeting brokers,” Bull added.

Broker response

Commenting on the matter, the Association of Mortgage Intermediaries chief executive Robert Sinclair said he was not surprised but he is “not panicking”. 

“It’s not unexpected that something like this was coming down the line and it is something that we have been speaking to the FCA and the Financial Ombudsman about,” Sinclair told FTAdviser. 

“The one thing we can never do is predict future interest rates, particularly in a world of volatility,” he added.

Sinclair noted that the FCA and Fos are “very much of the same mind” that as long as the justification for a decision is evident in a client's file, and that there has been a clear discussion about price and interest rate volatility then they will be as supportive of a case as they can be depending on the individual circumstances.

He also warned consumers they should be weary of legal firms trying to encourage them to sign up with them to take a case against a mortgage firm or adviser. 

“Consumers should remember that these are commercial firms trying to make money out of them and they aren’t acting in their best interest,” he said.

Instead, Sinclair said if a consumer does have a complaint he would remind them that they have a right to raise it directly with the firm in question and to go to the Financial Ombudsman Service on a free basis.

Likewise, mortgage brokers were disappointed to think this will be something they will have to contend with going forward.

West Yorkshire Money managing director Adele Forbes said: “The mind boggles with this blame society of passing responsibility for clients making a wrong decision, similar to complaints over early redemption penalties.

“Advisers assess and recommend the needs of clients at the time of advice. Unfortunately, we do not have a crystal ball on what the future holds, especially when new administrations enter government.”

But while many brokers expressed frustration, EHF Mortgages managing director Justin Moy noted that if a broker was doing their job correctly then they should have nothing to worry about.

“Reasons for any particular product recommendation should be clearly shown in the mortgage adviser's recommendation report, so if it was due to price, features, future plans, whatever the situation, there should be a clear reason any mortgage product was taken,” he said.

“This approach should stop the vast majority of mortgage borrowers looking to chase compensation. And if the borrower arranged their own product transfer directly with their own lender a few years ago, there is no recourse either, as that would have been without advice. 

He added: “This is even more reason to engage with a professional adviser, even if you think a new deal is straightforward to organise.”