Mis-sold mortgages – the new PPI?

A financial claim technology company believes millions of mortgage holders paid more than they should have done for their mortgages over the last 20 years and could be due a share of compensation worth billions of pounds.

Cheshire based ME Group says the claims involve overcharging on standard variable rate loans (SVRs) and calculates compensation could go as high as £4 billion in what it is calling ‘the next PPI scandal’.

Mis-sold or overcharged

Chief executive Rob Cooper said: “Since August 2017 over 100,000 consumers have contacted ME Group requesting help and around 52% of the mortgages we have assessed have been mis-sold, or have been overcharged by their lender in respect of mortgage interest. The average amount that customers are due back is in the region of £70-80,000.

“The scale of consumer detriment goes way beyond overcharging. There are families across Britain who have been harassed over mortgage arrears, or faced financial and associated health worries.

Evicted

“Some have ultimately been evicted from their homes for allegedly being behind on mortgage payments when in fact many have overpaid what was properly due to their mortgage lender.

“Like almost every financial services scandal that has gone before, this impacts financially vulnerable people the most. Typically those who are ‘mortgage prisoners’ are in the lower earnings bracket and could ill-afford to be overcharged for ten years or more on their mortgage.”

Variations in charges

The basis for the claims is a recent series of European court rulings regarding what consumers were told about variations in charges when they took out their loans.

A TV advertising campaign run by ME is urging mortgage holders to check the details of their loan agreements and say they have already scrutinised 20,000 agreements ‘with some consumers in line for five figure payouts’.

Investigating

The Financial Conduct Authority (FCA) has been investigating the issue of unfair contract terms raised by the European courts and has found widespread abuse.

It is expected that claims will be made against the mortgage providers or brokers involved in the original sale and, if rejected, will be referred to the Financial Ombudsman Service (FOS).

Claims against a provider who has since gone out of business will be referred to the Financial Services Compensation Scheme who have the power to pay compensation if they feel the mortgage was mis-sold.

Mortgage prisoners

Mr Cooper said: “There are millions of UK homeowners who have been paying more than they should have done for their mortgage, and many of these are mortgage prisoners who have been prevented by lenders from switching provider.

“Treatment of customers by the industry had been clearly unfair and borrowers rightly deserve to be remediated for those unfair practices.”