Fight claims firms that are using sourcing data

Mortgage brokers are being urged to challenge claims firms that allege mortgage mis-selling by using sourcing data from the date when the mortgage was sold.

Mortgage Strategy understands that data companies are selling information to claims firms that shows what products were on the market at the time the deal was done.

Claims firms are then alleging the broker mis-sold the mortgage if the customer was not recommended the deal that was the cheapest or the one that would have appeared at the top of the sourced data. But much of the data is believed to be inaccurate.

Mortgage Brain says it would never sell its data. It has been approached by a number of brokers and networks for advice on how to dispute the claims. As a result it has reconstituted its systems to show the products that were available at the time to help brokers.

Mark Lofthouse, chief executive officer of Mortgage Brain says: “At the time of the mortgage deal, a Key Facts Illustration would have been produced, along with a copy of the filters used and available products.

“These were stored in our archive and can be accessed by brokers free of charge.”

Robert Sinclair, director of the Association of Mortgage Intermediaries, does not believe this latest tactic will prove successful for claims firms.

He says: “There are many reasons why a broker does not recommend the first product on the list. Sometimes the cheapest product can have a lot of fees or LTVs that are unsuitable for the borrower. Most of these cases will be defensible to the Financial Ombudsman Service.”

He adds that if someone feels they were genuinely mis-sold a mortgage, they are not going to prove it by using sourcing data but by showing how it did not meet their needs.

Sinclair urges brokers to contact the client directly if a claim is made against them after reports that firms are making claims without obtaining permission from the client or receiving written consent.

He says: “This is fraud and if the claims firm is receiving the compensation on behalf of the client, who is to say they are passing it on?

“If you look at what the Ministry of Justice is saying these firms should be doing, verbal consent may not be enough.”

The latest complaint figures from FOS last week show there was a 35% increase in mortgage complaints last year. It received 9,537 complaints relating to mortgages in the year ending March 31 2012, compared with 7,067 in the previous 12 months.