‘You could be entitled to compensation up to £250,000’, ‘thousands owed for hidden loan charges and mortgages’ and ‘don’t delay – start your free application today’.
Barely were my feet back under the desk in 2020 before I was bombarded with emails telling me I could be entitled to compensation for a mis-sold mortgage.
In total, I received three emails from the same source in a little more than four weeks asking whether I had been sold a mortgage or secured loan after October 2004.
I received emails at the start of 2020 from no-win no-fee lawyers asking me if I had historic mortgages, and that I could be entitled to thousands of pounds in compensation
Even considering the looser affordability requirements of the pre-2008 world, it’s still highly unlikely anyone would have agreed to hand out an interest-only mortgage to a seven-year-old, as I was in 2004.
But that these emails came at the same time that I was seeing posters on the train to work, which stated so-called mortgage prisoners could be owed thousands of pounds in compensation, well it all seemed a little too much of a coincidence.
With the end of the PPI gravy train on 29 August 2019, the question has often been asked as to where the claims management companies and no-win, no-fee law firms which raked in thousands of pounds in commission could turn next.
Could the emails I received be the answer?
A quick Google search for ‘mis-sold mortgage’ returns a number of adverts offering to find victims compensation, two of which were adverts for the same people which contacted me; ‘Claim Your Hidden Commissions’ and ‘Claim Your Mortgage’.
Both are trading styles of the same firm, ‘Pure Legal Ltd,’ based in Liverpool and regulated by the Solicitors Regulation Authority.
Fishing: A search on Google for ‘mis-sold mortgage’ returns multiple adverts inviting compensation claims
What is it offering?
Claim Your Mortgage offers to help those potentially mis-sold interest-only mortgages after 31 October 2004 gain compensation.
Interest-only mortgages are loans where home owners only pay off the interest every month, but not the actual capital they’ve borrowed, which must be repaid at the end of the mortgage term.
Claim Your Mortgage state: ‘The rules governing the sale of mortgages state that the lenders and brokers must ensure that the mortgage is affordable not only at the time of sale but throughout the whole term of the mortgage, even if that means into retirement.
‘If it can be established that the mortgage was mis-sold then you may have a claim for losses from the start of the mortgage to date, and through to the full term of the mortgage.’
The law firm behind the emails, Pure Legal Ltd, said those who had taken out interest-only mortgages since November 2004 could potentially have been mis-sold
Complaints about interest-only mortgages often come from people who said they were advised to take one out but couldn’t afford to repay the capital at the end according to the Financial Ombudsman Service.
These were often from mortgage brokers on commission, or felt interest-only was the wrong mortgage choice for them.
Pure Legal say that in return for the name of your mortgage provider, the date you took out the mortgage and a few other ‘simple questions’, one of its ‘team of legal experts’ will assess your claim and determine whether you have a case.
The company said it could make claims with just the name of your lender and when you took the loan out
Like most CMCs and no-win, no-fee lawyers, Pure Legal take a slice of your payout if you get one, in this case 35 per cent plus VAT.
In the email they sent me and on their website they use the example of ‘David and Andrea’, eligible for £65,994 in compensation.
Of that sum, Pure Legal would take £23,097.90 under their 35 per cent commission.
It is worth noting that, much like with PPI claims, complaints about mis-sold mortgages can be made either to the lender, mortgage broker, the Financial Ombudsman Service or the Financial Services Compensation Scheme – if the lender or broker has gone bust – by complainants themselves, without the need for these companies.
I asked Pure Legal why I had received these emails.
Its director of compliance told me: ‘PLL partner with Click Labs Group, a UK based marketing agency, who help us contact potential new customers.
‘They and their partners have on our behalf sent you marketing material as you have opted-in or consented to receive these messages.
‘This is the lawful reason for why you have been contacted. You can unsubscribe from any of these messages instantly by clicking the relevant link if you have received an email.’
Though for what it’s worth, I don’t remember opting in.
Could mortgages really be the new PPI?
As of September 2019, £37.2billion has been paid out in successful mis-sold PPI claims according to the FCA, earning CMCs and law firms who packaged together large numbers of claims a hefty chunk of commission in the process.
But since the deadline for new claims at the end of last August, those businesses have had to look elsewhere to earn their keep.
On 1 April 2019, when the FCA took over regulation of CMCs, they were all required to re-apply for authorisation and submit business plans showing which areas they intended to operate in over the next few years.
While the FCA unfortunately was not able to share any data on this, and said it specifically couldn’t comment on whether CMCs were looking at mortgage claims, it would be a fair assumption that CMCs and no win no fee law firms had their eyes on this area.
The latest UK Finance figures found at the end of 2018 there were around 1.12million interest-only mortgages outstanding, though of course not all of these will have been mis-sold.
When it comes to official complaints data, it is slightly tricky to work out how many claims relate to interest-only mortgages and how many have been brought by CMCs, but it is clear the deluge of complaints banks received about PPI has not yet been replicated.
According to the most recent figures from the FOS, it received 9,909 mortgage complaints between April and December 2019, 5,827 of which were new.
It received 10,071 new complaints on the subject between April 2018 and March 2019.
By comparison, the ombudsman received 41,500 new complaints about PPI in the last three months of 2019 alone, and has now received more than 2million complaints about mis-sold insurance.
Meanwhile, the FSCS, which would pay out to complainants with valid claims if their mortgage adviser has gone bust, dealt with 270 interest-only mortgage cases between April and December last year.
Of those which it had completed, it rejected 147 and paid out in 85.
The most you can receive from the FSCS is £85,000.
This is certainly a slow start, and CMCs are also likely to be keeping an eye on payday loans, pensions and other potential mis-selling in the search for the new PPI, while interest-only mortgages are a far smaller pond to be fishing in anyway.
But, given that PPI payouts trebled to £6.2billion between 2011 and 2012, a slow start does not necessarily mean the topic won’t later catch fire.
And, at the very least, with claims firms on the hunt for their next payday, I doubt I’ll be the only one receiving emails inviting me to make a ‘free’ application in the hope of ‘free’ cash.
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