Mortgage advice and arranging
Customers of authorised mortgage firms are protected by FSCS for business conducted on or after 31 October 2004. FSCS can provide protection if a mortgage firm is unable, or likely to be unable, to pay claims against it.
FSCS is triggered when a firm authorised to advise on or arrange mortgages by the Financial Conduct Authority (FCA), goes out of business, for example, if the firm goes into administration or liquidation.
Once we are satisfied that a firm is unable, or likely to be unable, to pay claims against it, we declare the firm in default. A declaration of default opens the way for the firm's customers to make a claim for compensation to us.
FSCS can only consider claims relating to mortgage advice and arranging on or after 31 October 2004 and only against firms that were fully authorised at the date the advice was given. You can check whether a firm is authorised by using the FCA's financial services register
The main area of mortgage advice that may give rise to a claim falling within the remit of FSCS relates to the suitability of that advice for the customer's circumstances at the time.
Examples of unsuitable mortgage advice and arranging that may give rise to claims within the scope of FSCS include:
- Where a consumer has not been advised about the different types of mortgage available, which resulted in them choosing a mortgage that was not suitable for them at the time. They have lost money as a result.
- If specific details of the mortgage chosen are incorrect, for example, a longer term has been selected than the consumer had intended or required, and the consumer has lost money as a result.
- If a consumer was advised to switch mortgages but was not given an adequate explanation of why a switch should be made, and the advice to switch mortgages resulted in the consumer losing money.
- If a consumer was advised to take out a lifetime mortgage that was unsuitable for their circumstances at the time and they have lost money as a result.