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Ombudsman to tackle &#39inadequate&#39 payouts to borrowers

The Financial Ombudsman Service is scrapping the way that complaints over mortgage payment miscalculations are handled amid fears that lenders are failing to compensate borrowers adequately.

Compensation guidelines issued by the Building Societies Ombudsman Scheme and Banking Ombudsman Scheme are being suspended following a rise in the number of cases where lenders have calculated mortgage repayments wrongly.

Such mistakes leave borrowers potentially unable to pay off the loan in time. They then face steep increases in repayments or an extension to their mortgage term.

The FOS says complaints rarely reach the two ombudsman schemes because the guidelines encourage banks and building societies to handle compensation claims themselves. But it says this often results in an unsatisfactory outcome for borrowers as lenders fail to provide appropriate levels of compensation.

The FOS says it needs to adopt a single consistent approach to such complaints by N2, when it is due to acquire its powers. It is consulting with the industry with the help of the Council of Mortgage Lenders and Financial Services Consumer Panel to see what approach would best benefit borrowers.

Principal ombudsman David Thomas says: “Not unnaturally, customers expect financial firms to calculate figures accurately. Mortgage underfunding complaints would not arise if firms had simple checks in place to ensure the initial calculation was right. But, regrettably, the number of mortgage underfunding cases we receive is not diminishing.”


IFAs aghast over U-turn by the Tories to back multi-tie system

The Conservative Party has reversed its policy on polarisation, throwing its weight behind the creation of multi-tied advisers. In a pre-election policy document entitled, Financial Services: The Conservative Approach, it says: “While we support reform of the polarisation regime, we will require a financial intermediary to make clear whether he is a tied agent, offering […]

Chase Fleming rebrands again

Chase Fleming Asset Management is to undergo its second rebranding in less than a year, ditching both the Save & Prosper and Chase brands from its retail fund range. The fund manager will rebuild its business under the JP Morgan Fleming brand from the end of April. The Save & Prosper name, currently used for […]

CA relegates league as FSA rejects compulsion

The Consumers&#39 Association has attacked the FSA&#39s proposed league tables, saying they will be seriously undermined because there is no compulsion for product providers to participate. If firms are not compelled to hand over information about their product ranges, the tables will not offer a complete or accurate picture of the marketplace, says the CA. […]

Alliance Capital – ACM Bernstein Value Investments – American Value Portfolio

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Is three a crowd?

The pension versus Isa debate has raged on and off for years. Les Cameron, head of technical at Prudential, asks if three’s a crowd.   I think the debate was arguably settled by pensions freedom when the biggest downside of pensions – limited access and poor death benefits – was fundamentally changed. Total access, albeit with […]


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