Mortgage adviser G Benville, trading as Kingsfield, was investigated by the FSCS which found it could not pay the compensation owed to its clients.
Director of claims Jonathan Clark has confirmed that this is the first mortgage adviser to be declared in default under the compensation scheme.
He says: “We are looking into the situation and will release more details shortly.”
Baronworth director Colin Jackson says: “It should reassure mortgage consumers that if they are dealing with a regulated company and things go horribly wrong, then they are protected.”
Norwest Consultants principal Harry Katz believes that mortgage brokers need to be regulated to the same extent as financial advisers to protect consumers.
He says: “It is beginning to look like they are getting tougher on mortgage brokers but why don’t they just make the regulation for brokers equal to that for IFAs?”