Partially upheld: Mortgage advice complaints complaint against The Loan Partnership Ltd

Decision detail

Summary

Mr A and Mr P complained that TLP recommended an unsuitable second charge mortgage of £156,250 in May 2019 to repay a bridging loan. TLP failed to disclose or misrepresented material information about Mr A's foreign property mortgage (CHF 238,000 at 1.4%) and associated costs of approximately £2,000 per month to the lender. Although Mr A and Mr P subsequently fell into arrears and faced possession proceedings, the ombudsman found that the lender bore primary responsibility for the lending decision. The ombudsman upheld the complaint in part, finding TLP acted unfairly by not properly disclosing the foreign mortgage information, but rejected wider claims for compensation as the lender's decision to lend was the primary cause of Mr A and Mr P's difficulties. TLP was ordered to refund the broker fee of £2,245 and pay £300 compensation to each complainant.

The Ombudsman's reasoning

TLP was required to recommend a suitable mortgage and consider whether it met the lender's eligibility criteria, including affordability considerations. While the lender bears primary responsibility for the lending decision, TLP failed to act fairly by not disclosing material information about the foreign mortgage to the lender. TLP knew Mr A had significant ongoing costs relating to the foreign property but either failed to disclose this or misrepresented the situation to the lender. Although Mr A and Mr P signed a declaration that the income and expenditure form was accurate, they had disclosed the foreign property to TLP and may have reasonably assumed TLP, as the expert, would determine what needed to be declared. The ombudsman found no evidence that Mr A and Mr P had viable alternative options to the recommended mortgage, as they were in breach of the bridging loan terms and faced potential possession proceedings.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website