American author, Amelia Earhart once said, “You can do anything you decide to do. You can act to change and control your life; and the procedure, the process is its own reward” and although my lengthy bank battling journey has fallen a long way short of any results, there is no disputing my decision to act has rewarded me with an enlightening education.
During the course of my investigation into how my family and I became the victims of the financial crisis, I have learned,
- Bankers intentionally flooded the market with financial products which were open to abuse in order to increase their market share and their bonus’
Six painful years, five lever arch files and two unsuccessful FOS complaints later I have now reached the following conclusions:
- Both the FCA and the FOS’s allegiance lies only with the banks and not their victims
- Austerity measures have made it nigh on impossible for the victims of banking crime to access justice
- And the voice of the individual, however loud, is all but inaudible
Still void of success in the face of mortgage broker fraud, I have taken the following action;
- Applied for and obtained (via household legal insurance I purchased in 2005/6) agreement to spend £50,000 with DAS Legal Services to pursue Karrek Financial Management Ltd for criminal negligence
- Attended an SME Alliance event for what proved to be a very interesting meeting which not only gave me a great deal of insight into other banking crimes but also provided me with the opportunity to meet other victims and access professional bank battling expertise
- And, written the following letter summarising the criminal negligence of HBOS's panel approved mortgage broker to send along with 30 pages of evidence, to my newly appointed DAS lawyer, the Devon and Cornwall police and a barrister I met through the SME Alliance who has kindly agreed to look at my findings,
Further to our telephone conversation ...here follows an outline of my case along with supporting evidence.
In March 2006, having discussed our financial circumstances with Karrek Financial Management Ltd through whom we had previously purchased life cover, my husband was told by their mortgage advisor ****** ****** our monthly outgoings could be dramatically reduced if we agreed to switch our existing £725,000 mortgage with TMB to an interest only discounted mortgage with the Bank of Scotland and restructure our short term borrowings. He advised us to increase the debt secured against our home by firstly taking a further £65,000 by way of a Bank of Scotland further advance, secondly by making use of a £40,000 drawn down which, underwritten at outset, would be made available to us after three months of regular monthly interest payments and thirdly by taking a three month payment holiday for which we would also be eligible after making three monthly interest payments. His recommendation was to use all the additional funds raised against the remaining equity in our home to repay credit cards (see Doc 1. copy application form). Keen to alleviate his cash flow problems at a time when the terminal illness of two of his closest relatives (his mother and brother) was making it impossible to divide his time effectively between the needs of his family and the demands of his business, my husband agreed.
I have since discovered that not only is securing credit card debt against a family home a direct contravention of the Mortgage Code and financial regulations but the method the broker used to obtain this remortgage/ further advance was a blatant abuse of their position of trust and nothing short of fraudulent. Instead of advising how best to arrange our finances in the light of our circumstances, the broker’s objective appears to have been to affect a personal gain for themselves (in the form of a handsome introducer fee. (See Doc 2. Copy mortgage offer) by switching an existing mortgage and our credit card borrowings for an entirely unsuitable mortgage product which was not only unaffordable from outset but required falsified information to be used on the application form in order to obtain a Bank of Scotland mortgage offer.
- After a financial fact finding telephone conversation with my husband, the mortgage application (which we never saw) was submitted online (see Doc 3) by the broker whom we never met using false information which was tailored to fit the Bank of Scotland’s underwriting requirements. We did not supply the information the broker wrote on the application form (see affidavit Doc. 4).
- There were no acquisition costs to pay, neither were there solicitors or surveyors to instruct as the cost of the valuation and the conveyance, along with instructions, were either taken care of by the lender or added to the advance.
- And, on 30 March 2006, after being told by the broker verbally (again by telephone) we had received a mortgage offer for £790,000 from the Bank of Scotland as a result of him submitting our application on line we were sent, and duly signed, the declaration page and the direct debit mandate of an otherwise blank application form. There then followed another declaration sheet, once again without a completed application form, approximately two weeks later (see Doc. 5).
As a result of his efforts, the broker earned almost £4000 and we, unwittingly, agreed to move from a very tight corner which could have been rectified by the sale of our house, to an impossible situation amounting to tens of thousands of pounds in arrears (see arrears statement Doc 6), a £217,000 mortgage shortfall (see shortfall statement Doc 7) which occurred from the forced sale of our home in 2009 and six long years of battling with an unsympathetic bank while trying to establish precisely what happened to put us in such a position.
Had HBOS not sent me an entirely unsolicited copy of our original application form (minus the declaration pages) by way of an explanation to some wildly inaccurate claims they were making about the original purchase price and original purchase date of our house in response to my over valuation complaint to them, I might never have discovered the fraudulent nature of the information the application form contained. This evidence first came to light in January 2013 and, as a result of a complaint I then made to the Financial Ombudsman Service about overvaluation, irresponsible lending and the falsified information on our mortgage application, I was told (in January 2014 after a full FOS investigation had been completed) my case should have cited the mortgage broker and not HBOS. Needless to say the FOS were unable to uphold my complaint as it was deemed HBOS were faultless because they were not the appointed advisors for the mortgage sale.
The application form which ************ completed states that the mortgage product applied for was a sale he “advised” as a representative of Karrek Financial Management Ltd. It also states our accounts were available and the mortgage was not self certified. It goes on to claim the following;
- ************** had face to face contact with both my husband and I during the application process. This is completely untrue. We have never, on any occasion, met ************ and all communications between my husband and ************ were via telephone, email, fax or post. I have had no face to face or telephone contact with ************.
- Both ************and Karrek Financial Management claim they saw our original passports for money laundering purposes. This is completely untrue. We were merely asked to send photocopies of our passports and a council tax bill both of which have been signed off by Karrek Financial Management in handwriting which does not appear to be ************'s. (see passport Doc 8 and council tax bill photo copies Doc 9)
- Our earned income is shown on the application form as approximately 249k plus 75k with a further 50k in rental income for the years 2005, 2004 and 2003. Our actual income, as illustrated by our company accounts and Inland Revenue supplied tax returns, amounted to little more than 50k per annum in total for the years stated. (see financial evidence Doc 10)
- The purchase price and purchase date of the property is shown as £890,000 in 2004 when in fact it was purchased in 2000 for £250,000. (see Land Registry search. Doc 11)
- The age of the property is shown as 20 years old when in fact it could be as much as 300 years old or more and part of the property is thought to have been recorded in the Doomsday Book. (see Grade II listing Doc 12)
- The application states the property has five bedrooms and three living rooms when it actually has four bed rooms and two living rooms (see estate agent details Doc 13)
When I reported the details of this fraud to the Bank of Scotland, I was advised never to contact them again. Next I reported the matter to the FCA who were insistent that what had happened appeared to be fraud and therefore beyond the remit of both themselves and the FOS. The FCA advised me to contact the police. This I have done and my case details have been logged and given a crime reference number. The Serious Fraud Office for the Devon and Cornwall Police advised me to seek legal advice.
Having initially spoken to the Avon and Somerset Police Serious Fraud Office in August 2014 to inquire as to whom I should report this financial crime, I was told the Bristol police had uncovered a similar mortgage broker fraud amounting to 11 million pounds. This week Swinton Insurance Brokers directors were fined £900,000 by the FCA for creating an over incentivised culture which promoted miss selling and wrongdoing. It is estimated they will be required to pay 11 million pounds in customer compensation. I strongly suspect the same unscrupulous methods have been equally lucrative for Karrek Financial Management Ltd but to date I have been unable to get to the bottom of why they were removed from HBOS’ lending panel during my applications processing. (see HBOS screen print Doc 14).Nor have I been able find out if they have been the subject of other similar complaints or any formal regulatory disciplinary action. So far, I have requested this information from HBOS, Karrek, the FCA and Openwork broker network support. My requests have either been ignored or denied (see Karrek’s response letter Doc 15).
While HBOS’ dubious underwriting practices undoubtedly helped facilitate this fraud, their only response to my findings has been to say they acted in good faith. However, in order to assess my losses I would like to know if the mortgage contract my husband and I thought we had with the Bank of Scotland is now void as a consequence of the fraudulent information contained therein. If this proves to be the case, does it follow that the Bank of Scotland unlawfully obtained a possession order to force the sale of my home? If so, do I have a case for recompense against HBOS as well as Karrek Financial Management?
In addition to the copy of the original mortgage application, I have in my possession a number of pieces of correspondence between HBOS, their panel approved broker Karrek and us, as well as certified accounts and Inland Revenue printouts of our income at the time. I also have conveyance details for our original purchase of the property and HBOS screen prints stating the broker was removed from the panel during the application process, all of which I have enclosed with this letter. However, despite my repeated requests, I have been unable to secure any documentation from Karrek as they say they destroyed the file once the mortgage was 6 years old. More recently, September 2014, I wrote to both Karrek and their network support organisation Openwork to advise them I plan to take the matter of my falsified application form further. I have not received acknowledgement from either.
In the meantime I have, on the instructions of the police, informed the Bank of Scotland (formerly HBOS) that they have been a victim of fraud and asked them to file a police report too (see Doc 15a). I have received no letter of acknowledgement or response.
I believe the only witness’ I have are employees of the Bank of Scotland, namely those who underwrote our mortgage initially, Jill Miller and Moira Easton (see underwriting correspondence Doc 5) and Mr David Groves in Bank of Scotland Customer Services who sent me my first copy of the original application in January 2013 (see Doc 15b) without the signed declaration pages, when I complained about the inaccurate figures he was quoting while he was investigating my over- valuation/irresponsible underwriting complaint. (see my letter asking for declaration pages Doc 16).
Had ************ of Karrek Financial Management not falsified our mortgage application to secure us an unsuitable and unaffordable mortgage against our home, we would have had no alternative but to sell it for the £925,000 value the Bank of Scotland surveyor gave it at the time (see doc 17). A valuation which both the Bank of Scotland and the Financial Ombudsman have both later endorsed as fair and accurate in my FOS complaint of 2013. Had we sold in March 2006 instead of remortgaging and taking a further advance to refinance, we would have received £200,000 after repaying our TMB mortgage, less agents and solicitors fees. Instead, ************’s reckless self serving advice led to the Bank of Scotland obtaining a possession order in November 2008 because we were unable to meet our interest payments from outset. This gave the Bank of Scotland the power to force us to sell our home for a mere £665,000 two years later (see arrears statement Doc 6). Furthermore, I would not have spent the past six years suffering the immense stress of the Bank of Scotland’s relentless and ongoing pursuit of a £217,000 mortgage shortfall which was created from this fire sale.
I look forward to hearing from you.
Political theorist, philosopher, author and reporter, Hannah Arendt, once said, “Confessions of collective guilt are the best possible safeguard against the discovery of culprits and the very magnitude of the crime the best excuse for doing nothing” and after seven banking crisis ridden years filled with endless excuses for doing nothing and a plethora of meaningless confessions of collective banking and regulatory guilt, I am sincerely hoping £50,000 of legal funding will not only provide me with an audible voice with which to pursue our criminally negligent mortgage broker but I am also eager for it to provide me a long awaited opportunity to get up close and very personal with HBOS!
As ever, I now wait without patience, for news.