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FOS says lenders face brunt of complaints

The Financial Ombudsman Service says it believes that the overwhelming majority of mortgage complaints it will receive will involve lenders, not intermediaries.

In an interview with Money Marketing, FOS lead ombudsman Jane Hingston says she expects broker-related cases to make up just 2 per cent of its future mortgage caseload.

She says: “Bear in mind that when we talk about mortgage-related complaints, we really are talking about everything from the start of the mortgage to the end of the mortgage and everything in between.

“Sometimes it is easy to focus on the sale of the mortgage as being the very obvious flash point but actually there are lots of flash points as you go along which can give rise to a complaint.”

In a recent speech, principal ombudsman Tony Boorman warned that mortgage complaints had increased markedly, up by 50 per cent from 4,366 in 2006/07 to 6,500 in 2007/08.

He said that the FOS expected further increases this year and suggested it would make “significant awards” against poor advice.

Alexander Hall chief operating officer Andy Pratt says he is not surprised that the watchdog is expecting the level of intermediary complaints to be so low.

He says: “Historically, that has always been the case. It is usually at the lenders’ end where problems materialise.”

Hingston says that affordability is the main area of current concern for the ombudsman service.

She says that the FOS would not expect consumers to understand the ins and outs of mortgage products and it would be the responsibility of the broker or lender to tell the consumer that a mortgage would be unsuitable for them.

Hingston explains that when calculating compensation, the ombudsman service will seek to return consumers to where they would have been if the advice had been appropriate.

She says it is possible that where a broker or lender has wrongly recommended an interest-only loan rather than a repayment mortgage, they could be liable to cover the resulting gap in capital repayments.

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