Mortgage adviser wins No-Loan-No-Fee dispute

A mortgage adviser who sent a bill for a loan that did not go ahead has won a disputed case for payment.

This came after adjudication by the Financial Dispute Resolution Service (FDRS) found that the No-Loan-No-Fee rule did not apply.

The case concerned a man with an existing mortgage who sought a second loan from another lender to subdivide his property.

He signed a Service Agreement which noted that typically there was no cost to the customer because payment to a broker came in commission from a bank or non-bank lender.

But the deal fell over after the lender sought insurance certification which the borrower declined to give.

His reasoning was that he did not want the bank with his existing mortgage to know that he was seeking a second loan.

The offer of that second loan was then withdrawn.

The mortgage adviser then sent the customer an invoice seeking $750 plus GST, which the customer declined to pay.

The broker then began to pursue the debt, leading the customer to contact the FDRS, complaining that he was being bullied into paying a fee that he didn’t owe.

Further, he wanted reimbursement for costs incurred to procure a valuation of his property for loan purposes.

The FDRS went straight to adjudication and found in favour of the mortgage adviser and directed the customer to pay the bill.

The adjudicator found the mortgage provider had delivered the services requested, and there was insufficient evidence that the customer was misled or had received poor advice.

He added the customer’s existing mortgage compliance and insurance requirements were subject to his pre-existing agreements and the onus was on him to meet those obligations.

The adjudicator added the Service Agreement could have been drafted better, but it clearly listed set fees to be incurred when the No-Loan-No-Fee rule did not apply.

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