Mortgage Firm Collapse Compensation

Mortgage firms that are authorised by the Financial Conduct Authority (FCA) with most but not all mortgage holders protected from firm collapse by the Financial Services Compensation Scheme (FSCS).

For mortgages, your claim may be for poor mortgage advice if your mortgage adviser has collapsed and does not have enough funds to cover any claims.

• If you were mis-sold a mortgage endowment, this is already covered by already existing ‘investment’ advice protection rules under the FSCS from 28^th August 1988 see:  Investment Protection
• Mortgages themselves and your mortgage payment money are technically already protected by Bank and Building Society collapse protection see:  Cash Protection

The levels of compensation paid by the FSCS on mortgage company collapse varies depending upon when the mortgage advice was given as follows:

Mortgage advice became regulated (and therefore protected under the FSCS) from 31/10/2004.

Bad Mortgage Advice before 31/10/2004

• No protection.

Bad Mortgage Advice between 31/10/2004 and 31/12/2009

• 1^st £30,000 was 100% protected.
• Next £20,000 was 90% protected.
• Bad Mortgage advice liabilities above £50,000 – no protection.

Therefore, maximum protection was £48,000 per person per firm.

Bad Mortgage Advice between 01/01/2010 and 31/03/2019

• £50,000 per person per firm.

Bad Mortgage Advice after 01/04/2019

• £85,000 per person per firm.

Where You May be Covered: You must have suffered or will suffer a financial loss …

• Lost money because you were not advised about different types of mortgages and then chose a mortgage that was unsuitable.
• Lost money because your mortgage was incorrect, e.g., a longer term was selected than you needed or early redemption penalties were worse than you were told.
• Lost money because you were advised to switch mortgages, but it was not explained properly why the switch was better for you.
• Lost money because you were advised to take out a lifetime mortgage (equity release) that was unsuitable for you at the time.

Check Protection Now

• What does the FSCS cover?  https://www.fscs.org.uk/what-we-cover/
• FSCS and ‘Mortgages’  https://www.fscs.org.uk/what-we-cover/mortgages/

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