Many people have suffered losses because of the collapse of property values in Spain.
In a recent case, a woman who found herself with a mortgage she could not afford to repay sought redress on the basis that the broker who had advised her when setting up the purchase arrangements had given her negligent advice.
She had refinanced the mortgage on the home she shares in England with her partner in order to buy the Spanish property. Within four years, its value had collapsed to almost nothing and the couple could no longer afford to service the mortgage.
Compensation was sought for the losses resulting from the negligent mortgage advice. The woman applied to the Financial Ombudsman Service, which referred her complaint to the Financial Services Compensation Scheme (FSCS). After initially rejecting the application, the FSCS ruled that compensation was payable, but it could only pay compensation for losses relating to ‘regulated business’, which would exclude the loss on the property.
As this would leave the couple facing a loss of nearly £100,000, they sought a review of the decision of the FSCS by the High Court.
The Court ruled that the FSCS was required to award ‘fair’ compensation and interpreted that as meaning compensation sufficient to restore the couple to the position they would have been in had they not acted on the negligent advice.
The Court directed the FSCS to reconsider its assessment of the compensation payable in the light of the ruling.
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