A radio ad for Ease Your Mortgage, a mortgage securitisation company, heard on 2 April 2017, claimed “Breaking News, Ease your mortgage announces that 8 out 10 mortgages have apparently been sold by your lender. We believe you may have a legal case if your lender failed to follow correct procedures. It will only cost £260 to obtain a full legal opinion confirming if your mortgage was sold or not. Planned court action or settlement in your favour could entitle you to write off your current mortgage balance by up to 70% net of fees”.
The complainant challenged whether the claim that a mortgage balance could be written off by up to 70% was misleading and could be substantiated.
Samweb (UK) Ltd t/a Ease Your Mortgage said that the premise that a consumer could have their mortgage reduced or written off was based on the notion of improperly conducted mortgage securitisation (where a mortgage was sold by a lender to a third party). That would have occurred where the lender (without the consumer’s knowledge) would have received a sum of money at least equal to the value of the outstanding balance as of the cut-off date of the securitisation. If the third party who the mortgage was sold to, did not have the correct legally binding documentation that gave them the same rights as the mortgage lender, then there would be no further liability for repayment under the original mortgage which would result in a 100% reduction in the consumer’s mortgage.
They further said that, in accordance with their discussions with the Claims Management Regulator (CMR) and in accordance with the CAP Code, the ad stated that any future reduction of the mortgage would be “up to 70% net of fees” which was based on the 25% plus VAT ‘No win no fee’ agreement that a consumer would enter in to if they chose to join the Legal Quest Mortgage challenge. Samweb said that they were willing to work with Radiocentre and to make changes to their ads.
Radiocentre said that they worked with the advertiser to ensure the wording of the ad made it clear that any write-off was contingent on the successful outcome of legal action and that the maximum percentage given was ‘up to 70%’. They also ensured that the script was worded to make clear that it was a belief that the advertiser held based on their assessment of the legal position and not a factual statement. Additionally, they ensured that the script was clear that the £260 fee was to obtain a ‘full legal opinion’ to determine whether or not the respondent had had their mortgage mis-sold. Further, they said that the advertiser had provided them with sufficient evidence to demonstrate that there was a possible basis of legal action against lenders who had securitised loans.
The ASA considered that consumers would understand that the advertiser offered a service which made an individual claim against a mortgage lender similar to other claims management companies and that a claim would see their mortgage reduced by up to 70%. We understood from the evidence that it was only theoretically possible that where a mortgage lender had failed to follow the correct procedure when securitising a mortgage, that could result in the balance being written off, and that this had not yet been proven in court. We acknowledged that the ad used words such as “believe”, “may”, “planned court action” and “could”. However, we considered that these words did not make it sufficiently clear that what the advertiser offered was based on a theoretical possibility only and was not a demonstrably successful claim service, i.e. they had not yet successfully written off a consumer’s mortgage balance.
We noted that the claim the reduction would be “up to 70% net of fees” was based on the premise that if the mortgage had been improperly securitised then the debt would be written off completely and therefore the consumer would have received a maximum of a 70% reduction in their mortgage balance and the rest would cover the fees the advertiser charged. We considered that consumers would not understand what was meant by “up to 70% net of fees” and that it was not sufficiently clear that the reduction of the mortgage was 100% and that the remaining 30% of the outstanding mortgage balance would be owed as a debt in fees owed to the advertiser.
We considered that the overall impression created by the ad was that for £260 the advertiser could help a consumer reduce their mortgage by up to 70%. However, for the reasons above we understood that this was not the case and therefore concluded that the ad was misleading. We acknowledged that Samweb were willing to make changes to their ads.
The ad breached BCAP Code rules 3.1 (Misleading advertising).
The ad must not appear again its current form. We told Ease Your Mortgage to ensure that their ads made clear the services they offered and how their fees were calculated.