There is an increase in enquires from mortgage brokers regarding clients who are stating that they have been misadvised about the decision to take out a 2-year fix as apposed to a longer, 5-year fix, according to Cardiff based Jencap Partners, a specialist consultancy in complaints management. This means they will unfortunately be exposed to higher interest rates sooner than expected. Brokers state their views and opinions below:
John Bull, Managing Director at Jencap Partners, said “As a specialist consultancy in complaints management, we are seeing an increase in enquiries from mortgage brokers, where the clients have raised the issue of having taken out a 2-year fix rather than, say, a 5 year fix, meaning they will be exposed to higher interest rates sooner. So far, the larger, more active claims management companies haven’t rolled out their marketing campaigns at full speed as they are likely still making money on mis-sold pensions, but the number of mortgage complaints and claims will inevitably increase, regardless of whether they have any merit.”
Samuel Gee, Director at Manning Gee Investments Limited, said “If a 2-year fixed rate mortgage was recommended at this time, and it was the right advice for the borrower, then any complaint is unlikely to be upheld. However, it is important to consider why a broker would suggest a 2-year deal during a period if historically low ultra-low interest rates, when a 5-year deal would have been a more suitable option for a borrower with no plans to move or pay off their mortgage within that time frame.”
Scott Taylor-Barr, Financial Advisor at Carl Summers Financial Services, said “I hope this doesn’t become a “thing”, namely to make a decision and then look to get compensation from your advisor if the decision you ultimately took ends up being the wrong one. Would they be looking to recompense if they’d gone for 5-year fixes and the rates had gone down, too? The notes and documentation around the meeting and the advice given to the client are going to be key.”
Adele Forbes, MD at West Yorkshire Money, said “Advisers assess and recommend the needs of clients at the time of advice, Unfortunately, we do not have a crystal ball on what the future holds, especially when new administrations enter government. An advisors backup is often found in a very detailed sustainability report, including background to the appointment with CRM notes.”
Justin Moy, Managing Director at EHF Mortgages, says “Reasons for any particular product recommendation should be clearly shown in the mortgage advisor’s recommendation report, so if it was due to price, features, future plans, whatever the situation, there should be a clear reason any mortgage product was taken. This approach should stop the vast majority of of mortgage borrowers looking to chase compensation.”
Gary Boakes, Director at Verve Financial, says “During the course of your 25-35 year mortgage, it is unlikely interest rates are always going to be in your favour. If this is allowed then it will just open the floodgates every time someone is not happy with their new rate, which will just mean that our recommendations and suitability letters will start to have more legal wording, signed to cover ourselves in the future. This is likely to mean mortgage advisors will start charging higher fees. In short, it will have a drastic knock on effect. I can’t remember all this hysteria in 2008 when interest rates were a lot higher than now, but our culture has clearly changed and it’s worrying.”
