Upheld: Mortgage advice complaints complaint against PFM Associates Limited
Financial Ombudsman decision DRN-5946684 of 2017-09-22T00:00:00+00:00. Mortgage advice complaints complaint against PFM Associates Limited. Outcome: Upheld.
Decision detail
| Reference | DRN-5946684 |
|---|---|
| Decision date | 2017-09-22T00:00:00+00:00 |
| Firm | PFM Associates Limited |
| Product | Mortgage |
| Claim type | Mortgage advice complaints |
| Outcome | Upheld |
| Remedy | PFM Associates Limited must: (1) Refund fees charged to Mr and Mrs C totalling £1,000; (2) Reimburse the arrangement fee of £1,095 paid to the lender; (3) Pay 8% simple interest on both amounts from date of payment until settlement; (4) Pay compensation of £500 for trouble and upset caused. |
Summary
Mr and Mrs C sought mortgage advice from PFM to fund construction of a new home, needing funds urgently by December 2016. PFM recommended a mortgage in October, but the lender's offer in November contained a condition requiring them to repay their existing mortgage before drawing down funds. Mr C was shocked to learn this, stating he had been assured by PFM's advisor that they would not need to sell their home to obtain the new mortgage. Mr and Mrs C had not even put their property on the market, making it impossible to meet the requirement in their timeframe. They withdrew the application and sought alternative finance. The ombudsman upheld the complaint, finding PFM failed to clearly communicate this critical requirement in its suitability report or initial advice, making the recommendation unsuitable given their circumstances and urgent timeline.
The Ombudsman's reasoning
The ombudsman found that while Mr and Mrs C always intended to sell their existing property, PFM failed to make clear that this sale had to be completed before they could draw down the new mortgage funds. The suitability report contained no mention of this requirement, and phone conversations showed Mr C was unaware of it. PFM's subsequent responses to Mr C's queries did not adequately correct his misunderstanding. The fact that Mr and Mrs C had not put their property on the market supported their lack of awareness of this critical requirement. Given their urgent timeline (needed funds by December 2016/January 2017), the mortgage was unsuitable as they could never have met the requirement to repay the existing mortgage in time.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| PFM Associates Limited, all decisions | 3 | 67% |
| Mortgage advice complaints, all decisions | 3,925 | 18% |
| Mortgage, all decisions | 24,740 | 22% |
Source
Read the original decision on the Financial Ombudsman Service website