The Advertising Standards Authority has forced claims management company Money Boomerang to pull a television advert in which it was found to have exaggerated the potential payout for a mortgage misselling successful claim.
Money Boomerang, which only targets borrowers who have received advice from an intermediary, has been running a mortgage misselling advertising campaign since April, however it is not known if it has been running the banned advert since then.
In its advert, a voice-over says: “Have you taken out a mortgage since November 2004? Did the adviser ensure you could afford the mortgage and it was the right mortgage for you? In some cases, you may have been given the wrong advice. Money Boomerang can carry out a free mortgage review and find out if you were mis-sold. You may have a claim worth tens of thousands of pounds.”
A couple are then seen opening a cheque, made out to the value of £5,300. The on-screen text adds: “Settlements can vary from £1,000 to £10,000+ depending on type of claim and how many claims you may have. T&Cs apply.”
However, a mortgage adviser, who is not named in the ASA’s judgement, challenged whether the advert was misleading because it exaggerated the likely payout in the event of a successful claim.
Mooney Boomerang responded by saying a borrower who was missold their mortgage typically overpays between £200 and £500 a month for a product which should have cost much less. They said the average length of the mortgage would be in the region of five to eight years which would result in a claim worth £12,000 to £20,000.
However, Money Boomerang said in order to manage the expectations of customers it felt prudent to state that settlements could vary from as little as £1,000 up to in excess of £10,000. It added that those on interest-only or sub-prime mortgage could have even higher claims.
The claims firm provided four examples of recent cases that had been assessed by an expert in missold mortgage cases in which the expert recommended the customer pursue claims for damages of between £3,377 and £29,828. The expert backed Money Boomerang’s assertion that claims could range from as little as £1,000 to tens of thousands of pounds, saying it was “not unreasonable”.
But while the ASA “acknowledged” the four examples provided by Money Boomerang, it said these claims had not yet been taken up and therefore no decision as to the level of damages to be awarded had been made.
It also said it had not seen adequate evidence of supposedly successful claims where the firm said it had secured funds of up to £3,400 for borrowers.
In a judgement published yesterday, the ASA said: “We considered consumers were likely to understand from the ad that the level of damages awarded for mis-sold mortgages ranged upwards from £1,000, but that it was generally the case that the amount awarded to claimants was considerably higher and that many claimants had received amounts higher than £20,000 or £30,000.
“Because we had not seen evidence that was the case, we concluded the advertising claims that consumers could have claims ‘worth tens of thousands of pounds’ or that settlements could vary ‘from £1,000 to £10,000+’ were misleading and had not been substantiated.”
The ASA said the advert must not appear again in its current form and the firm has been told it should ”not make claims for which they did not hold substantiation”.