Unauthorised Mortgage Broker

[Pinky69]

I posted this in the Legal section but so far no response. Does anyone in the mortgage section have any advice or experience of this?

 

A friend has discovered that the mortgage broker who brokered her mortgage in 2005 may not have been authorised by the FSA. She found this out when doing research about mis-sold mortgages as she has a good case to make for mis-selling. The broker didn't comply with any of the rules! In trying to trace where he is to make a claim, she checked the FSA and OFT registers and he has never been registered with any of them either as a broker or Appointed Representative of a company. She has sent an Subject access request to the mortgage company and has asked the FSA if they have any trace of him on their system. There is a long story about this guy and she now knows he is a conman.

 

I have been advising her and have been looking at the Financial Service and Marketing Act to see what kind of redress she might have with the lender, who is not allowed to receive applications from unauthorised third parties. It seems that the agreement becomes unenforceable - so far so good. Then I get to Section 27 which outlines that she can reclaim monies paid and the house. Again, so far so good. Then I come to what it means for her claiming the above and become unstuck because the qualification for claiming in Subsection 7 seems to contradict itself.

 

(7) If the person against whom the agreement is unenforceable—

(a) elects not to perform the agreement, or

(b) as a result of this section, recovers money paid or other property transferred by him under the agreement,

he must repay any money and return any other property received by him under the agreement.

 

 

It seems to contradict itself! On one hand she would have a claim and then she would have to pay it back to the lender! What would the point of that be?? My friend is of the opinion that it may refer to any additional borrowing made after the mortgage was set up ie she would get the funds for the original mortgage back then have to repay anything over and above that, which she doesn't have.

 

 

Can anyone shed any light on this? Thank you.

Edited June 14, 2010 by Pinky69

[frettful38]

Hi pinky is it not worth sending a Data Request to the mortgage company. I sure they must have details of this broker as they would have had direct dealings with him and they may be some useful information in the data request which could be helpful.

 

Also is it not a requirement or duty of the mortgage company to make sure that the broker is/was legally licensed to carry out any work? It would be also an idea to see what checks the mortgage lender carried out when dealing with this broker, well that's just my opinion and maybe a good place to start.

[Pinky69]

Thanks Frettful. A SAR is on its way to identify what the bank knew about the broker and all their dealings with him. A further twist has come to light in that the rogue broker had the same home address as another broker using the same company name - the address the rogue broker used for business - so we wonder if he was faxing stuff in the other broker's name and the bank thought they were dealing wit an authorised broker. I think the evidence is clear he had no licence and wasn't exempt as an appointed representative. So it comes down to who the bank thought they were dealing with and we will just have to wait and see. In Scenario 1 she will be able to get compensation from the bank as they should have had sufficient checks and balances to know whether a broker was authorised or not. Scenario 2 will be a case for mis-selling if he was authorised and she has a very strong case - he broke every rule in the book and as a first time buyer she didn't know any better. She has also written to the FSA to ask if they have him listed in any capacity at all and she will ask for their advice once she has all the facts. They prosecute in each and every case of unauthorised business. This is big enough to get a solicitor's advice once she has the facts.

[frettful38]

Well pinky, with a friend like you on the scene I am sure that you will get justice for her. I am glad I have been of some help. and hopefully you will find some further evidence to make your friends case even stronger than it already looks.

 

About time we got stopped being ripped off by these fraudsters. You should make sure that the mortgage company acted according to the law when they dealt with this broker, made the relevant checks and background history e.t.c as they could be liable to for dealing with a broker who was not authorised. There are rules, and regulations in places for people who do not act properly.

 

I wish you luck and your friend, take care.

[Pinky69]

[Pinky69]

My research continues. I have found a copy of the bank's intermediaries application form and they must give all their FSA details plus a signature. There is also a section at the end that someone at the bank has confirmed that that the application is from an authorised broker. I also found the bank's intermediary application form for registration as a broker.

 

So, the bank obviously thought they were dealing with the authorised broker - the woman who was living with the unauthorised one who brokered the mortage and wasn't an Appointed Representative - the one who dealt with my friend. Another point. My friend phoned him once and a woman replied - with a baby crying in the background. It's possible he was doing the donkey work whilst she couldn't work because of the baby then they used her details to make the applications. The bank will have to check the signature on the application against the signature they have recorded for her but as each application has to be checked by the bank the signature on the application was probably hers. Thus she carries the responsibility for employing an unauthorised representative who had no FSA approval and submitting an application as an Authorised Person for someone she never even met - and in my book if that is the case she has set herself up for being sued for the mortgage and damages. Miss Snoop will get to the bottom of this! The bank's conditions for intermediaries state that she must remain insured for claims for 6 years after the beginning of the agreement - which takes us to December this year - but I doubt if she will be insured. So that will mean suing her then going to the FRCS. All speculation but just thinking of possible scenarios. We need to get the info and get to a solicitor as soon as possible.

 

Feel free to add your advice folks.

[frettful38]

Well I am to say the least pinky, looks like you have been busy. If what you have found out is confirmed to be true then someone will have to pay the repercussions of their actions he or she.

 

You say the banks thought they were dealing with an authorised broker, do you think if the shoe was on the other foot we would get away with that excuse? No I don't think we'd have a leg to stand on so the bank my be liable to as they carried and processed transaction and can they give you 100% guarantee they did all the relevant checks..........maybe you need this question answered too.

 

Maybe you need to ask the bank what evidence was shown and given to them to convince them that this boker was authorised and if they have evidence could they forward you a copy?

 

There is something fishy going on and by the looks of it I am sure you'll get to the bottom of this soon. Try and get as much as info as you can together, especially with everyone involved with the mortgage deal. Were there any solicitors involved and if so maybe you could get info from them too, as they also would of had some dealings with the broker.

 

Hope this helps, just that I hate it when people get done over as I had been and would like to offer as much as help as I can.

 

good luck pinky & freind, its great playing the female version of sherlock holmes isn't it, especially when you get a great result in the end:D

[Pinky69]

Thanks Frettful. It is certainly revealing a right can of worms! Of course we must wait for the info. The FSA received my friend's letter to them today so we will have them onside because they hate rougue brokers. The bank also received her SAR so now we wait.

[frettful38]

great, hope you get some good news soon, please keep us posted

[Pinky69]

They moved away in 2006. I have found out where they moved to - and their house cost an arm and a leg! They can more than afford to pay my friend back if it is them she has to sue. Who needs a tracing agent!

[kilkenny]

Hi, I am in a similar situation. When we were sold our mortgage we dealt with broker A who used the same trading name as broker B but from a different address. Broker A has no FSA licence and broker B was an appointed rep of a network. Broker A gave us the initial advice about interest rate and terms etc which were incorrect. Broker B then took over and when we complained that broker A was not authorised he simply said broker B was. We have been fighting the lender and the broker through FOS with little effect and now want to start a claim against broker A. We have also involved he FSA who are investigating both brokers and who have closed the lender to regulated business. We are at our wits end as due to the incorrect advice re interest rates and terms we are facing repossession. Any help you could offer us would be appreciated. We cannot get legal aid and can't afford a solicitor. When we complained to Broker B's network they said that Broker A was an employee of Broker B but we don't think that is right

[Pinky69]

I have done a power of research since I last posted. If Broker A gave you advice on a specific mortgage rather than just general advice about mortgages, that is a Regulated Activity and is a criminal offence. An Appointed Representative, Broker B, cannot have another Appointed Representative working for him. An Appointed Representative can only be employed by a Principle ie a firm or person who is fully authorised by the FSA. I'm afraid the claim would have to be made through the courts - and the claim is against the Principle ie the network authority, who are telling you a lot of lies. There is no alternative. It is too big an issue for us to deal with ourselves and only a court can award damages. They have been caught in a [problem] and and you are entitled to a claim for mis-selling and damages. If the lender goes for repossession you have a complete defence in court.

Edited June 19, 2010 by Pinky69

[kilkenny]

Broker A definately advised us and his name is on the initial idd document. As we can't get legal aid is there any reputable claims companies that would help us? We have been fighting on our own and have held off repossession since November 2008 but can't do much more both me and my husband's health has been effected. We know we have been turned over and we will not give up as these people want to take our lifes work - we won't let it happen.

[Pinky69]

The IDD itself is not a Regulated Activity. What you need to prove is that he gave you advice about a specific mortgage in the form "I recommend Mortgage A with Bank B" rather than "I recommend a mortgage which has a low introductory rate for a fixed term." If he recommended a specific mortgage then he has broken the law. He has further broken the law if he filled out the application form for you. There are No Win No Fee firms on the web but I don't know how good or honest any of them are. You'll find them if you google "Mortgage Mis-selling." I would SAR the lender and specifically ask for a copy of the application form as there is a box to tick which states whether a specific mortgage was recommended or not. If you go for a claims company, they will do all that for you.

[kilkenny]

Hi

 

We already have the file from the Principal. It does not have the mortgage application form but it has what is called the "mortgage fact find" which is signed by Broker A. Also files notes of what we were advised and what was recommended also signed by broker A. The files notes have in the heading "Adviser - Broker A".

 

The principal clearly says to us in writing and verbally that broker A was ok as he was employed by Broker B. It seems that is a blatent lie. We have been to the FOS who were not interested in the regulatory status of the broker and said that was a matter for the FSA. We know the FSA are now investigating Broker B but they can't help us individually. Do we have to prove that broker A's advice was bad or just that he was not properly authorised. Thanks for all your help

[Pinky69]

Mortgage Fact Finding is not a Regulated Activity and can be done by a non-authorised introducer. You need to prove that he made the specific recommendation. Did he also help you fill up the application form? There is no comeback against him if he was unauthorised. Your comeback is against Broker B as he accepted a recommendation from someone who wasn't authorised and made an application on the strength of that recommendation, which is why you need proof from the lender that it was Broker B who completed and submitted the application form. Broker B's Principle, the fully authorised network, is responsible for the mis-selling damage as they take responsibility for everything Broker B does. If you look at the webpages of the claims firms, you will find lists of all the reasons why a mortgage can be mis-sold.

[frettful38]

Hi pinky,

 

You have given me something else to think about now . You mention that if the mortgage broker filled out the application form and submitted the application.

 

I thought that it was the brokers job to fill in the mortgage application and submit it to the mortgage company:confused:

[frettful38]

The IDD itself is not a Regulated Activity. What you need to prove is that he gave you advice about a specific mortgage in the form "I recommend Mortgage A with Bank B" rather than "I recommend a mortgage which has a low introductory rate for a fixed term." If he recommended a specific mortgage then he has broken the law. He has further broken the law if he filled out the application form for you. There are No Win No Fee firms on the web but I don't know how good or honest any of them are. You'll find them if you google "Mortgage Mis-selling." I would SAR the lender and specifically ask for a copy of the application form as there is a box to tick which states whether a specific mortgage was recommended or not. If you go for a claims company, they will do all that for you.

 

 

My mortgage broker done all of the above that you have written pinky, so I will dig further and look for some solicitors to look at this further I think as I know that things were not as they should have been right from the start.

 

thanks for that info, I really appreciate it

[Pinky69]

Frett - the broker does fill out the application form. The problem is when one person posing as a broker fills out the application form with you, which he is unathorised to do, and an authorised Appointed Representative sends the application to the lender.

[frettful38]

Ahhhhhh stupid me, brain going in to information overload, . My broker came to my house and filled in the application, come to think of it now I will check a few things. You see at that time my broker was acting for another company and I will see what exactly it reads in the documents. I think he was acting as a appointed representative, but better make sure.

 

Thanks for putting me straight pinky, nearly shot myself in the foot again

[frettful38]

Right I found the letter and my broker wrote:

 

I was and still am, a self-employed Mortgage and Protection Specialist working under the xxxxxxxxxx Mortgages Ltd name, xxxxxxxxxx Mortgages Ltd is currently an Appointed Representative (AR) of xxxxxxxxx Mortgage Ltd, before that we were appointed representatives of xxxxxxxx xxxxxxxx (UK) LTD, who were the mortgage arm of xxxxxxxxxxx

 

So my broker was a self-employed mortgage and protection specialist and that means he was a mortgage broker?

[Pinky69]

Yes - he was a mortgage broker and an Appointed Representative of Firm B. Now you can check his status and Firm B's status on the FSA register. Firm B would have to be fully authorised as they are responsible for your broker's conduct.

[frettful38]

Thanks pinky, will the FSA have a record going back to August 04?

[frettful38]

So which company do I search for on the FSA register there are so many in the response my broker gave me?

 

http://i450.photobucket.com/albums/qq223/sophiak_bucket/broker.jpg

[Pinky69]

They have records going back to 2001. The Principle, which should be fully authorised, is Morgan Intelligence Ltd.