Mortgage brokers are still being forced to pay £700 to fight allegations of misselling despite the industry's arbitration scheme ruling in their favour in the majority of cases.
Brokers are furious after the Mortgage Code Compliance Board confirmed that the non-refundable charge would stand after releasing figures showing that 60 per cent of borrower complaints lodged with its arbitrator have been thrown out for lack of evidence.
IFAs are demanding to know why they must pay hundreds of pounds to clear their name when the MCCB admits that many of the complaints were “unsuitable” for ruling by the arbitration scheme.
Defending the system, the MCCB points to a clause in
the mortgage code which states that borrowers can be made to contribute towards the costs of their case if it is judged to be “frivolous”.
But the regulator concedes that it is unaware of any examples over the past year when the arbitration scheme has applied this measure.
Mortgageforce managing director Rob Clifford says:
“The clear majority of cases bought before the arbitration scheme are spurious and it is brokers that face a £700 bill to pay for them. Why can't borrowers be made to pay for some of this cost?” Regency Financial Planning partner Bryn Walker says: “It is a no-lose gamble for borrowers at the moment. Brokers could accept paying a much smaller fee for a system that would throw out ridiculous cases earlier in the process.”
MCCB head of communications Brad Baker says: “Because of the reputation of the industry, it is right that there is an independent red-ress arrangement financed by brokers for customers.”