Mortgage Mis-Selling: The UK’s Next Big Claims Scandal?
British consumers are no stranger to financial claims scandals. The Payment Protection Insurance (PPI) debacle saw billions of pounds of mis-sold services reclaimed by unwitting customers of banks and lenders.
The unfortunate reality of life in Britain is a society of intense and complicated financial rules. As the majority of us are not legal experts or qualified financial professionals, we often have to take businesses at their word when they claim to be operating fairly and within the bounds of the law.
As the PPI scandal demonstrated, though, this is not always the case.
Following on from PPI, there is now the potential for a new claims scandal on the horizon, one that could have a huge impact on claims management companies looking to support their customers with new opportunities, and it’s known as mortgage mis-selling.
What Is Mortgage Mis-Selling?
Mortgage mis-selling is simpler than it might sound. It most often occurs when a broker advises a borrower to take a loan they cannot afford or when a lender agrees terms knowing their agreement is not actually feasible for the consumer.
Customers may believe that because they’ve signed a contract, they have no recourse to make a claim once they realise they’ve been sold a mortgage they cannot properly repay under the terms of their agreement, but this isn’t true. Even with contracts in place, brokers and/or lenders should have made their terms clear and outlined any potential issues that they should have realistically foreseen.
The Financial Ombudsman Service (FOS) takes mortgage mis-selling very seriously. It considers the fair treatment of consumers critical to proper mortgage offers, and if there is evidence to the contrary, it will support claims of compensation.
Why Is Mortgage Mis-selling the Next Big Thing for CMCs?
In recent years, details have emerged that mortgage mis-selling was rife in the noughties, particularly during and following the financial crisis.
High up on the list of problems is the regularity at which interest-only mortgages were mis-sold, with brokers routinely allowing borrowers to acquire loans that were not sustainable or affordable under their current financial situation and that of the nation’s economy during such turbulent times. Under Mortgage Conduct of Business Rules (MCOB), customers should have been protected, but flouted regulations left them vulnerable to higher costs and debts. By going against MCOB, lenders are now liable to repay fees to many thousands of borrowers.
Given that these mortgages are still relatively young — having been sold within the past few decades — as they mature, it is predicted that more and more individuals will start to realise they were mis-sold loans. With an increase in claims comes increased media attention, further churning the powder keg that is mortgage mis-selling until it explodes to a similar degree as PPI. Cases of mortgage mis-selling are becoming so severe and prevalent that experts are even calling upon the UK government to get involved, suggesting that these types of claims should be put in the spotlight to ensure consumers are provided with the compensation they deserve.
While it is certain that mortgage mis-selling won’t account for the same amount of available claims as PPI, this scandal is still going to present massive opportunities for new claims. It has been suggested that nearly £4 billion in compensation is owed to borrowers across Britain. A large part of this market is accounted for by interest-only mortgage mis-selling, but it is not the only chunk. There are many other ways customers have been mis-sold mortgages through the overselling of financial terms and agreements, more of which will likely be given a focus as the details of the interest-only mortgage scandal come to public attention.
With the scale of the problem only now being fully realised, the future of claims management companies looks set to be based around reclaiming financial compensation for hundreds of thousands of mis-sold mortgages.
What Can Your Claims Management Company Do to Prepare for a Rise in Mortgage Mis-selling Claims?
As mis-sold mortgage claims rise among consumers, the amount of money your claims management company can make from them hinges on two things:
- The volume of claims you can take on
- The efficiency at which you can carry out the claims process
With so many claims potentially coming your way, processing them faster means higher profit margins and the ability to work through more to greater reward.
However, you cannot predict how many claims you’ll actually see, which means you don’t want to start aggressive expansions or large-scale hiring. But what happens if vast numbers of mortgage mis-selling claims start to come in, as predicted by experts? If you can’t manage the volume and process them quickly, you’ll miss out.
Claims management software is the answer. LogiClaim is the ultimate solution for claims management companies. Designed to support fast-paced activity through bespoke systems and automation tailor-made for the claims industry, it allows you to scale your operations to meet demands without committing to large-scale investments. While mortgage mis-selling claims may offer your CMC complicated projects to manage, integration of LogiClaim software means you can improve productivity and speed up claims processing without compromising on the quality of the service you offer.
How does LogiClaim do this?
With our dedicated software, you can support smoother and more productive workflow through the utilisation of tools such as our template document builder. This service lets you craft unique customer communications fast, by pulling essential details automatically from their client file — save time and money on your outbound messages, freeing up hours to focus on more claims, while also ensuring accurate information is shared with your customers. Other benefits to workflow that LogiClaim offers includes visual task tracking, so you can stay on top of your claims, and automated client onboarding, purpose-built to ensure you get all the information you need without having to invest time on early client calls for claims that may go nowhere.
To break this down simply, what this means for your CMC is that LogiClaim’s built-in workflow engine ensures that most stages of the claim are run automatically, without the need for any operator input, thus freeing up more operator time. Through this engine, you can start to process claims at a faster rate, ensuring you offer an effective yet competitive business model.
Keep costs down and workflow up with Logican’s LogiClaim claims management software. Get in touch today to discuss how we can help or to arrange a free no-obligation demo.