FSCS rejects third of claims against broker

FSCS rejects third of claims against broker

More than a third of claims made against a mortgage broker, which failed after being ordered by the regulator to offer clients redress, have been rejected by the Financial Services Compensation Scheme. 

The lifeboat scheme received 1,400 claims against The Mortgage Matters Partnership, which was declared in default in January, including 550 active claims and a further 861 claims awaiting further information or sign-off from the claimant. 

The FSCS has already paid out £205,973 against the firm but of the claims currently active, 36 per cent have been rejected by the FSCS and another 50 per cent are still in progress. 

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The Cheshire-based mortgage intermediary stopped trading in 2015 and most claims against it concern mortgage and remortgage advice, alongside some payment protection insurance claims.

In 2017 the Financial Conduct Authority intervened and directed The Mortgage Matters Partnership to write to customers offering redress for unsuitable advice after the firm admitted it may not have fully considered the costs and implications of consolidating debts when advising customers on debt consolidation mortgages. 

Debt consolidation mortgages enable borrowers to pay off debts from credit cards, store cards and other personal loans rolling them into one monthly payment at a lower interest rate.

But they are not guaranteed to save customers money, as borrowers could end up paying more to service their debt over a longer period. 

The FSCS said 199 of active claims against The Mortgage Matters Partnership were unsuccessful because they did not meet the scheme's "criteria" and earlier in the year it said the most common reason for this was a lack of evidence.

The cost of the FSCS levy on the industry has been a growing regulatory burden for some advisers, with the charge making up a significant proportion of the annual bill from the regulator. 

FTAdviser is aware of advisers receiving bills of which 80 per cent was ring-fenced for the FSCS levy and some firms facing an increase of 113 per cent in costs to the lifeboat scheme for the year ahead. 

Advisers have voiced their frustration at paying towards a scheme which they believe funds "claims coming from the mis selling of unauthorised investment products" and sees "the good guys pay for the sins of the bad guys". 

In April the FSCS confirmed it would levy £532m from the industry this year, £16m more than it had originally predicted and inclusive of £74.6m in management expenses. 

The lifeboat scheme pointed to an "uplift" in the number of claims expected against self-invested personal pension operators as cause for the increase. 

FSCS said the final levy to be shouldered by life distribution, pensions and investment intermediaries this year would be £153m. 

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