Mortgage Miscalculation Claims: Should You Be Paying Attention?
As a claims company, new opportunities for acquiring rightful compensation for your clients is something that you’ll always be looking for. In 2019, one of the biggest earners for claims companies, PPI cases, ran its course and is now no longer a claims management service you can sell. With the loss of this profit generator comes a need to find other ways to support your business. So what replacements are there for PPI?
Mortgage miscalculation claims are now big business for claims management companies. Many firms have started to focus on seeking out potential consumers who have been affected by the problem. But why — and is this something your business should be paying attention to?
The Rise of Mortgage Miscalculation Claims
A few years ago, lender West Bromwich Building Society was found to owe around 6000 borrowers compensation after mortgage miscalculations on tracker mortgages. A spate of other high profile cases followed this discovery, involving the likes of Halifax, the Lloyds Banking Group and even the Bank of Ireland.
As tighter regulations come into play by governing legal authorities, and individuals become more aware of their options — and the potential for mortgage miscalculation claims — the volume of claims has seen a dramatic increase over the past few years. Mortgage miscalculation claims were once rarely heard of. Since 2016, many thousands have been made — and reported.
What Is a Mortgage Miscalculation?
Mortgage miscalculation is exactly what it sounds like. When a client agrees to a mortgage with a lender, they accept interest and fees on top of their lump sum payment. Mortgage miscalculation occurs when a lender overcharges the client on their mortgage over the interest and fees they’ve agreed to.
There are many reasons miscalculations can happen, from direct and intentional financial misconduct to carelessness when it comes to managing borrower payments — particularly following adjustments to interest rates. It has been observed by the Financial Conduct Authority (FCA) that some miscalculations have occurred as part of automated changes to repayments that banks were not paying attention to, following amendments to Bank Rate by the Bank of England.
Whatever the cause of a mortgage miscalculation, the result is the same. Your client has been paying more money than they should to their lender, which means they are owed that money back. Since mortgages can last decades, there is the potential for this to be a substantial payout. The Telegraph reports that Edward David Ellis, a solicitor and landlord, was owed £14,000 following his mortgage miscalculation claim.
How Many Mortgage Miscalculation Claims Are There to Be Made?
2018 saw one claims management company court controversy with an ad that stated 95% of mortgage sellers are guilty of financial misconduct and mortgage miscalculations. Figures are unlikely to be this high — but that doesn’t mean they are too far off.
Investigations by the FCA discovered there is the potential for legitimate mortgage miscalculation claims in around 750,000 individual cases — and this is for repayments on arrears alone. The FCA has even gone so far as to say the number could be much higher. The claims could total up to £150m, according to the Financial Times.
With such a high number of claims known to be available for customers, without even investigating those sold mortgages that haven’t fallen into arrears, the scope of mortgage miscalculation claims is exceptionally wide-reaching.
For claims management companies looking to expand into mortgage miscalculation claims for their clients, our claims management software is exactly what you need. LogiClaim streamlines work, automates tasks and helps you boost profitability. Discover more by contacting one of our experts today.