Mortgages

You could claim compensation from FSCS if you’ve received bad mortgage advice that caused you to lose money or if you were mis-sold a mortgage endowment. In all cases, the firm, broker or adviser you dealt with must have failed for us to be able to help.

Mortgage advice

If you received bad mortgage advice and lost money as a result, you could be eligible for FSCS compensation. You must have been given the advice on or after 31 October 2004.

Examples of situations where you could claim compensation for bad mortgage advice:

• If you lost money because you weren’t advised about the different types of mortgage and chose a mortgage that was unsuitable.
• If you lost money because certain details of your mortgage were incorrect, e.g., a longer term was selected than you needed.
• If you lost money because you were advised to switch mortgages but weren’t given an adequate explanation of why.
• If you lost money because you were advised to take out a lifetime mortgage that was unsuitable for you at the time.
• If a financial adviser recommended that you take out a mortgage endowment policy. This will usually be an investment claim, which FSCS has protected since 28 August 1988.

We can only protect advice that relates to a property in the UK which is your primary residence (i.e., not a commercial or buy-to-let property).

Since 6 April 2007, FSCS has also protected home purchase plans (when a bank or other provider buys your home then sells it back to you for the same price after a set period, so you don’t pay interest) and home reversion plans (a type of equity release where you sell some or all of your property for a lump sum or regular income, staying in your home as a tenant but paying no rent).

Mortgage endowments

An endowment policy is a regular savings plan that will pay out a lump sum at the end of its term, or if you cash it in early, or on the policyholder’s death.

If you think you were mis-sold your endowment policy and it was linked to a mortgage, you could be eligible for FSCS compensation. You must have lost money as a result and must have received the advice after 28 August 1988.

Examples of situations where you could claim compensation:

• Your adviser didn’t properly explain that because the return from an endowment policy is linked to the stock market, there was a risk that your policy could leave you with a mortgage shortfall at the end of its term.
• Your endowment is due to pay out after your retirement age and it was clear at the time the advice was given that you wouldn’t be able to carry on paying premiums after your stated retirement age.
• Your endowment is not due to mature until after your mortgage loan has finished, and this wasn’t made clear to you when you received your advice.
• You already had an endowment and were advised to surrender it and take out a new one.

There are time limits to be aware of when you’re claiming compensation for mis-sold endowments. You either have:

• Six years from the date your policy was sold.

Or, if this gives you more time:

• Three years from the date you realised (or should reasonably have realised) that you had cause for complaint.