Intermediaries worry that claims management companies are encouraging a wave of compensation against brokers and lenders for historic mortgages.
A significant amount of CMCs that once handled PPI claims are moving into other areas.
This is fuelled by the Financial Conduct Authority this year announcing the final PPI claims deadline in 2019.
Therefore CMCs have begun to hunt for claims against areas including self-cert loans, interest-only and endowment mortgages and general bad financial advice.
Lentune Mortgage Consultancy managing director Stuart Gregory says: “Following the PPI scandal, and the establishment of the ‘red line’ from the FCA on claims for that, the claims management companies need another target.”
Mortgage brokers are worried of an influx of claims against them and lenders.
John Charcol senior technical manager Ray Boulger says either type of firm could be claimed against.
He says: “If they have the choice of lender or broker, they will probably pick the company with the biggest pocket.
“But if the client is using a broker and is complaining about the advice then they’ll probably claim from the broker, it depends on what they are complaining about.”
Gregory thinks interest-only mortgages will be the main battleground.
He says: “These claims companies are currently using Facebook, its seems, as a means of attracting clients – with sponsored posts appearing leading many borrowers to believe that after mortgage regulation was implemented in 2004, that there’s every chance they were mis-sold interest-only.”
But some brokers say there are legitimate mis-selling claims.
Trinity Financial public relations and communications director Aaron Strutt says: “Some people were mis-sold mortgages, if they have a legitimate claim where they were unfairly treated then fair enough.”
However concerns remain over fake claims.
Perception Finance managing director David Sheppard says: “When people see pound signs they’ll try and see if they can get free money.”
Some think the issue with mis-sold mortgage claims will only snowball in the future.
Your Mortgage Decisions director Dominik Lipnicki says: “As PPI comes to an end we’ll see even more.”
But others say the issue will be fairly contained.
Maxwell Moore director Jonathan Moore says: “There has been mis-selling of mortgages to a degree, especially prior to the credit crunch, but I am unconvinced it can be turned into a widespread market in the way that PPI has been.”