Claims management companies will struggle to win interest-only mortgage cases or even find borrowers who want to lodge a claim, according to the Association of Mortgage Intermediaries.
Many commentators have warned interest-only will be the next big misselling scandal, after the FSA published rules which will force lenders to ensure interest-only borrowers have a credible repayment strategy in place. The regulator estimates around 1.5 million interest-only mortgages worth £120bn will be due for repayment over the next decade, with many borrowers unsure of how they willl repay the loan.
The Ministry of Justice’s register reveals the number of claims management firms with ‘mortgage’ in the title has leapt from 21 in March to 46 presently.
Claims management company Money Boomerang says it is launching a TV advertising campaign to specifically target interest-only misselling.
But speaking at the Mortgage Business Expo in London last week, Ami chief executive Robert Sinclair (pictured) said there was no systematic misselling of interest-only mortgages.
He said: “For any claims managers that might be in the room, my message is do not be silly – you are not going to get anywhere, there is no systematic misselling of interest-only. You will struggle to get compensation out of it and will struggle to get people who will want to claim.
“I actually do not believe people were missold interest-only. Most people walked into this with eyes wide open.”
Sinclair warned claims firms that target interest-only cases could find they are straying into regulated mortgage advice if they recommend a customer changes their repayment method.