"The judge’s finding that the warnings provided in the mortgage offers and statements are sufficient to give the claimants constructive knowledge for the purposes of limitation is highly significant."
Whilst a small number of these have gone to the Financial Ombudsman Service, the majority currently look as though the firms face court claims and action. In a statement, the AMI warned that this is "very expensive to defend" and has been a factor in escalating PII excesses and premiums.
It says the last few months have been "encouraging" in that a number of cases have terminated in the final weeks before commencement of court hearings. In addition, the AMI said there have been three cases "which provide evidence that we are correct to defend these claims".
The results in Ross and Ross vs Attanta; Collett and Collett vs APF Private Clients; and Colborn and Colborn vs Albany Park all provide support to the broker position.
In the APF Private Clients case, the Colletts had sought advice in 2005 which resulted in them part exchanging their current property in order to enter into a regulated interest-only mortgage with Birmingham Midshires.
The claimants brought a claim against APF in April 2020, just before the 15 year longstop date for limitation. They claimed that they were advised to enter into an interest-only mortgage when a repayment mortgage would have been more affordable, and that APF failed to advise them that they would need a suitable repayment vehicle in order to fund the repayment of the mortgage at the end of the term.
The Judge ruled that, on the basis of the documentary material available and, in particular, the mortgage offer letters and mortgage statements, the claimants either knew or could be taken to have known that their mortgage was an interest-only one and they did not have a repayment vehicle in place.
As per Ross vs Attanta, the judge also found that the claimants must have had sufficient understanding of the advice they were seeking from the defendant to appreciate the scope of the duty owed to them.
Furthermore, the judges ruled that the fact you would be required to pay more interest on the entire capital sum in an interest-only mortgage than on a reducing capital sum in a repayment mortgage was something that any individual should understand.
In a statement, Kennedys Law, who acted for SPF Private Clients, said: "The judge’s finding that the warnings provided in the mortgage offers and statements are sufficient to give the claimants constructive knowledge for the purposes of limitation is highly significant. The vast majority of claims against brokers for mis-selling interest only mortgages are being brought well outside the primary limitation period. Previous attempts to strike out claims on similar grounds have been unsuccessful and therefore this decision could mark a significant turning of the tide for defendant mortgage brokers."
Robert Sinclair, chief executive of AMI, commented: “These decisions strike out the cases as being time barred. In addition, the courts in delivering their judgements have also considered many of the substantive issues under review. These broadly have reduced the amounts of claim substantially, established that they have limited or no merit, set out that the costs of court time outweigh potential benefit and challenge the quality of both the claimant evidence and expert witness work."
