Hello and thank you for your question. I will be very pleased to assist you. I'm a practicing lawyer in England with over 10 years experience.
Are you able to clarify the precise nature of the offer. From what I understand you were to pay £10K however:
1. Where was the balance of the money to come from for the equity? Was this a mortgage or from the investment company?
2. Was the flat to be purchased in your name?
3. What was the £20K to be for?
1. From a buy to let mortgage
2. Flat in joint names with my wife and I
3. There was never a full explanation of what the £20k was for. I was told afterwards its what they call a 'gifted deposit' where they show the solicitor that I am putting down £20k when actually I am not. The books show a purchase price of £80k but I was only paying £60k?
Not sure if it makes a difference but the property was being purchased in Scotland
Thanks. Ref the mortgage was this to be sourced independently by you or was this to be sourced by the "investment company"?
Finally I hope, could you explain exactly what you understood you would receive as service for £10K (I note what you say in your question)
the mortgage was sourced by the 'investment company'. This company are called Ward & Co www.wardpi.co.uk
For the £10k I was told that I would be getting a flat that would have instant equity and a tenant in situ. had it been explained that I would need to be recieving, hiding and returning funds to a 3rd party I would have walked away. I thought I was getting a great deal, somewhat naive looking back.
£10k I thought was their finders fee for finding these bargain properties
Thanks. I think that is all the information I need. From what you say the company acted as a mortgage broker amoung other things arranging a mortgage for you. Is that correct?
Yes, as part of their service they also acted as a mortgage broker. and found me the mortgage with virgin money
The mortgage was for £60k.
Thanks. From what you say the deal that was structured for you amounted to mortgage fraud and money laundering under the Proceeds of Crime Act. It is not uncommon for fail terms to be handed down for mortgage fraud and the latter is a serious offence in itself. Accordingly you likely did well to walk away from this. If this was the deal that was structured, this calls into question their fee. There is nothing wrong with a company charging a fee for their services providing it is clear what those services are and what services are actually performed. A fee charged for arranging an unlawful and criminally liable transaction would not be sustainable as a transaction that amounts to a criminal offence and that is unlawful cannot serve as good consideration for your money.
The issue for you may be one of evidence. If you have evidence of everything you say above then in principle it should be relatively (I use the term advisedly) straightforward for you to recover your money. The problem in my experience is that brokers who are involved in unlawful mortgage or other financial work are careful what they commit to writing and will typically try to arrange so that mortgage application paperwork points to you as the borrower as having given false information rather than they as the broker. Here there is no offence committed as you did not proceed but there is still the question of showing that they did not give you any value service for your fee.
How you proceed may turn to some extent on how much evidence you have. Are you based in England and Wales or Scotland?
I am based in England
In terms of evidence they have put very little in writing and now when I ask them to put an explanation forward they cannot provide anything and will only speak to me over the phone.
Thanks. The obvious place to start is by contacting them and setting out what happened when you first approached them - i.e. what you were told and the clear basis you understood you were handing over £10K. If you have any documentation that support what you say keep hold of it. You can go on to express your concern that what they actually arranged for you appears on the face of it to amount to mortgage fraud and a money laundering offence which not only exposed you to potential criminal liability but is not good consideration as a service for your money and as such they are in breach of contract.
They have since offered me a new 'deal' where I pay them another £6k and they transfer it straight back to me so they can show a mortgage company that I have transferred them funds. Sounds equally as dodgy and I have asked them to put in writing how it works. I am awaiting this...
Ref your penultimate post this behaviour would not be unusual for a broker involved in this type of activity.
When I questioned them in terms of legality they said 'they have done loads of these deals and never had an issue'
I can confirm without doubt that the arrangement was unlawful and particularly the mortgage fraud element could have resulted in a custodial sentence had it been picked up. It is true that much mortgage fraud in overstating deposits etc is not picked up but when it is it is prosecute as obtaining money by fraud and because of the amount invoived in a typical mortgage this can often result in custody
Following on in your initial correspondence, you can go on to say that you cannot consider any further business with a company that would willingly or negligently put you are such risk. Ask that they return your funds within 3-5 working days at which point you will (if you are willing) consider the matter closed. Failing this you will consider the following steps:- Contacting the Financial Conduct Authority disclosing your experience and to confirm their authorisation status as they do not appear to be authorised by the FCA to carry out mortgage work. - Contact trading standards to report potential breaches of consumer protection laws, particularly unfair trading practices in failing to provide documentation in relation to their services and misrepresenting their services to clients.
Either of these steps could cause significant difficulties for them and may encourage them to up without further question in the hope that you will leave them be. You can finally also say:- Issue a claim in the county court for the return of your money for breach of contract as they have not supplied any valuable service to you nor can they produce any written documentation on what their service was to be
If your claim is up to £10K then it will be heard in the small claims court which is very cost effective. If over that, it is heard in the fast track in which very limited solicitors costs can be recovered
The easiest way to issue proceedings is by using the courts online service (below)
great thank you.
If you paid by (or any part of the money) by credit card you can request the money to be returned by your card provider in the first instance too.
Not possible if you paid by bank transfer or cheque etc.
Just to check as it was them that arranged the mortgage then it is them that has attempted the fraud not me? They are trying to wash their hands of the matter as they 'got me to mortgage offer stage'
I paid by bank transfer
Well this is the rub... based on what you say yes it was if they entered all the figures on the application and structured the deal. The problem is that such brokers are not without wit and they will typically defend themselves when caught out by saying something like "well we just used figures given to us by our client" and "the client signed off the application form not us". A little more difficult for them to get away with this these days but typically the paperwork will be prepared so it is your hand in the cookie jar not theirs. However to reassure you that there is no criminal aspect here as no money was actually obtained from the mortgage lender. Obtaining a statement from your solicitor might be very helpful and copies of any relevant attendance notes from his file in case the matter proceeds to court.
Have I been able to help you with all your questions on the above?
I think so, thank you
So as a first point of escalation I need to send them the letter you describe above
and wait for their reaction?
That would be the approach I would suggest setting a timeframe for response. If the matter goes to court you need to show that you attempted to resolve directly first. 7 days should be sufficient for a reply. If they don't reply or call you (typical) then ensure you take detailed notes of your conversation and then email them with your contemporary notes of what was discussed and agreed. This creates a contemporary record of a conversation which again is useful in court and overcomes brokers unwillingness to commit to writing so they can massage facts at a later date potentially.
Is there anything else I can help you with?
My worry is that they are making out they are doing me a favour in letting me have an alternate property and usually I would lose my funds. I am obviously worried about losing £10k, do you think this is likely?
Even worse I guess is to proceed with them on the basis that I would be commiting mortgage fraud!
As they have provided you with no lawful service for your £10K they are whatever else in breach of contract and therefore legally must return your money. Providing you can show on balance of probability that the deal was unlawful (which with your solicitors statement should not be overly difficult) then you are entitled to the return of your money. They cannot bounce you in to another property and sending them more money given what has gone before would seem madness. You need an honest authorised mortgage broker from what you say not someone who is at best negligent and at worst engaged in pretty serious whitecollar criminal activity
I hope that above has been of some assistance?
They seem adamant that they would not be liable to legally return my funds but I guess they would say that.
Many thanks for your help. Should I send the letter as stated above or get my solicitor to do it?
Quite so they would. What companies think and what the court thinks are frequently two very different matters. Based on their conduct to date one would not expect them to meekly hand back your money without pressure or a court order as above. However based on what you say they are on very thin ice generally and specifically would appear to be in breach of contract to you which is your primary basis of a claim.
I do not think a solicitor will add much weight at present and you could deal with initial steps yourself to save yourself fees unless you prefer otherwise.
I hope you are able to recover funds without recourse to the county court. If you have no further questions for now I should be very grateful if you would kindly take a moment to rate my service to you today. Your feedback is important to me. If there is anything else I can help with please reply back to me though
Thank you very much for your help.
Am I able to reply back to you about this case without further charge?
Yes I am happy to deal with any follow up queries you have (on a sort of "fair use" basis if that makes sense) without further charge. Just come back either via a link in your email or "My Account" on this site if you have any other questions. If you have nothing further for now I should be very grateful if you would kindly take a moment to rate my service to you today - this will also save the thread to your account if you need to come back to it
Excellent thank you and I note the 'fair use' policy, happy with that.
One final question - should I send this note just to the person highest up in the company or one that I have been in contact with?
I'd probably escalate to the managing director or equivalent at this point. You have given your contact fair opportunity from what you say and he has made his position clear.
Sorry - just checked through old emails and it seems they actually used a 3rd party mortgage broker.
Does this effect things further?
Sorry to drag this on
This explains why they are not authorised potentially by the financial conduct authority. However as to the remainder of the above it makes no difference to the remainder. They are still in breach of contract from what you say
I have asked for a full copy of the contract terms and conditions. is it worth waiting for these before I do anything or should I proceed as they have not provided me with the service I paid for?
I should be tempted not to do too much waiting as you want your money back. If you follow the above proposal you will be mentioning the lack of terms anyway and can specifically request signed copies as part of your initial letter or email.
I can't recall signing this and not sure why I would sign the reverse. Its not to say I didnt sign but seems a bit strange.
The simple position to take is you do not recall ever seeing this document before and dispute that you signed it and that if you did it was not explained to you what you were signing. The onus is upon him to prove that you agreed to any terms he seeks to rely upon.
Even if you did sign it you should be able to argue that you did not understand what you were signing as an attempt to charge £10K for just an introduction is an unusual term to say the least and the burden is upon the company to prove you understood what you signed (if you did). Small print at the bottom of a page is not normally sufficient under the Unfair Terms in Consumer Contracts Regulations.
OK great, thank you very much.
Will let you know how I get on.
Please do and good luck