How to Claim Compensation for a Mis-Sold Mortgage
A mortgage can be mis-sold in several ways: a broker recommended a deal that was wrong for your circumstances, the term ran past your retirement so the repayments were never affordable, you were put on an interest-only mortgage with no credible plan to repay the capital, you were talked into a costly remortgage that mainly benefited the adviser, or you were never told how much commission the broker earned. If the firm gave regulated advice, that advice had to be suitable for you. Where it was not, and you lost out as a result, you can complain and ask the firm to put you back in the position you would have been in. You send the complaint yourself, it costs nothing, and you keep 100% of any redress.
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Firms that advise on or arrange mortgages are regulated by the Financial Conduct Authority (FCA). Under the FCA's Mortgages and Home Finance: Conduct of Business sourcebook (MCOB), advised sales must be suitable for the customer and the lender must properly assess affordability. If you were given unsuitable advice or the mortgage was sold without a proper affordability check and you suffered loss, you can complain to the firm. The firm should investigate and issue a final response, normally within 8 weeks. If it rejects your complaint or does not reply in time, you can take it to the Financial Ombudsman Service (FOS) free of charge. You generally have six years from the event, or three years from when you reasonably became aware you had cause to complain, to bring a complaint. You must normally refer it to the FOS within six months of the firm's final response.
Step by step
- 1Gather your paperwork: the mortgage offer, the suitability report or 'reasons why' letter, the fact-find, your illustration, and any record of what the adviser told you. Note exactly how you were harmed (unaffordable payments, an interest-only shortfall, undisclosed commission, or being remortgaged unnecessarily).
- 2Write to the firm that advised on or arranged the mortgage and make a formal complaint. State clearly that you believe the mortgage was mis-sold, explain why the advice was unsuitable, and ask the firm to compensate you for your loss. Keep a dated copy.
- 3Give the firm up to 8 weeks to send its final response. If it agrees, check the redress puts you back where you should have been. If it rejects you, refuses to engage, or the 8 weeks pass with no answer, move to the next step.
- 4Refer the complaint to the Financial Ombudsman Service within six months of the final response, using its online form. The FOS will review the file for free and can order the firm to pay compensation if it agrees the mortgage was mis-sold.
What they'll say, and your comeback
“This was an execution-only sale, so we gave no advice and owe you nothing.”
Comeback, Ask the firm to evidence that. If an adviser steered you toward a particular product, completed a fact-find, or issued a suitability report, it was likely an advised sale and the MCOB suitability rules applied. The Financial Ombudsman looks at what actually happened, not the label on the file.
“You signed the documents, so you accepted the mortgage.”
Comeback, A signature does not make unsuitable advice suitable. On an advised sale the duty to recommend an appropriate mortgage sat with the firm, and the lender had to assess affordability. Signing the paperwork does not waive your right to complain or to redress.
“This was too long ago to look at now.”
Comeback, Time limits run from when you reasonably became aware you had grounds to complain, not just from the sale date. An interest-only shortfall or commission you only recently discovered can be relevant to when the clock started. If the firm refuses on time-bar grounds, the Financial Ombudsman can rule on whether the limit actually applies.
FAQ
Does it cost me anything to use the Financial Ombudsman Service?
No. The Financial Ombudsman Service is free for consumers. You never need a claims management company, and there is no need to pay anyone a percentage. You bring the complaint yourself and keep all of any compensation awarded.
What kind of compensation can I get?
Redress aims to put you back in the position you would have been in had the mis-sale not happened. Depending on the case, that can include refunding extra interest or fees you should never have paid, addressing a loss caused by bad advice on an interest-only mortgage, and compensation for any distress and inconvenience.
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A self-serve tool, not a law firm. General information, not legal advice.