Arrowhead Financial Limited · DRN-6289630

The complaint Mr D and Mrs V complain that Arrowhead Financial Limited – an appointed representative of First Complete Limited trading as PRIMIS Mortgage Network – did not give them clear information about the proof of income required by their lender. What happened Mr D and Mrs V had a mortgage with lender H, with a fixed interest rate of 4.62% until 30 April 2028. In May 2024, they sought mortgage advice from a broker, Arrowhead Financial. I will refer to PRIMIS throughout this decision as it is the principal firm and respondent to this complaint. Mr D and Mrs V wanted to move home and needed to borrow some more money to do so. PRIMIS recommended that they should port their existing mortgage to the new property and borrow the additional amount with their existing lender. The application was approved in principle. But Mr D and Mrs V said PRIMIS never told them what lender H’s requirements were to verify Mr D’s income. They said they asked lender H directly and it said they needed an independent accounting firm to sign off Mr D’s company accounts. Mr D and Mrs V said they did not have time to do that, so they went to a different lender, N and received an offer on 28 October 2024. They repaid the mortgage with lender H on 8 November 2024 and incurred an early repayment charge (ERC) of £8,217.10. I issued a provisional decision upholding the complaint in part. My provisional findings, which form part of this decision, were: I have reviewed everything. Having done so, I still consider the complaint should be upheld but not to the extent recommended by the investigator. I know both parties will be disappointed by my findings. But in the circumstances and after reviewing all of the evidence I consider it is a fair way to resolve this complaint. Where there is a dispute about what happened, I have based my decision on the balance of probabilities – in other words, on what I consider is most likely to have happened in the light of the evidence. I am satisfied that the lender initially told the broker that it needed two years SA302 along with corresponding tax overviews. Because of how Mr D structured his business, he did not have that information. There is evidence of the following emails from lender H to the broker: • 5 June 2024, lender H told the broker that it did not support the application because there was an undeclared loan and credit card balances were higher than declared. It said if lending was reduced then it would need the latest two years signed accounts. • 4 July 2024, lender H told the broker that it needed finalised and signed off accounts for Mr D and evidence an unsecured loan has been repaid,

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The broker said that he was aware of the requirement for Mr D’s accounts to be independently verified, but Mr D and Mrs V decided to submit accounts signed off by Mrs V. We have a letter from a firm of chartered accountants that supports that Mr D and Mrs V were introduced by the broker in July 2024. Looking at the evidence we have, I do not think the broker’s recollection is likely to be correct. We have evidence that the accounts signed off by Mrs V were submitted before 4 July 2024, when the lender said they weren’t acceptable. So their decision to sign the accounts off themselves was likely made before the referral was made to the chartered accountants in July. It is unusual that the broker has not provided us any records to support what was discussed with Mr D and Mrs V. There are no records of any phone or in person contact or emails. That is out of line with good practice in my experience. There is no evidence that the broker ever confirmed the lender’s requirements in writing to Mr D and Mrs V. I note that under the Consumer Duty the broker was required to support consumer understanding, including checking that key information has been understood in any one-to-one interaction. The information the lender needed from Mr D and Mrs V was key to their application. So the broker should have checked they understood what was required. Mrs V has also given us a copy of text messages between her and the broker on 26 September 2024. The broker said “I was unaware that independently reviewed/signed accounts was a requirement until I received [the response from [lender H] in September 2024]”. So either the broker was aware of the requirement as he said in his statement and therefore misled Mrs V. Or he was not aware of the requirement and has provided misleading information to us. In either scenario, I do not see how I can place much weight on what the broker has told us. There are clear discrepancies in his account of what happened, his record keeping is poor and there is nothing to show that he set out in writing to Mr D and Mrs V what the lender needed or confirmed their understanding of what was needed. Mr D and Mrs V have been clear and consistent that they were not told that the accounts needed to be signed off independently. On balance, I consider it more likely than not that the broker did not tell them that until 26 September 2024. So I do not think the broker treated Mr D and Mrs V fairly. Where a business has made an error we usually try and put the affected party back in the position they would have been in had the error not occurred. Mr D and Mrs V’s position is that they were left with no choice other than to proceed with another lender or broker. The broker said he was unable to help and they’d lost confidence in them. They said they were under pressure to conclude missives and they did not have time to get the accounts signed off independently. I understand Mr D and Mrs V’s position and why they feel they have been treated unfairly. But I do not see how I could fairly conclude that PRIMIS should refund the ERC. The main reason is that lender H had not approved the application. We do not know that even if Mr D and Mrs V had submitted independently signed off accounts whether it would have met its affordability requirements. Mr D and Mrs V were borrowing more money, so lender H was entitled to assess affordability. So even if they had got independently signed off accounts, the application might have been declined and they would still have incurred the ERC. Further, while I understand that Mr D and Mrs V were under pressure to conclude missives, the only evidence of that is one text message from the estate agent checking on progress.

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There is nothing to support that the sale and purchase were going to fall through if things were delayed or that there was any particular urgency to complete. Mr D and Mrs V said it would have taken around four to six weeks to get the accounts independently signed off. It is not clear whether that could have been done more quickly. But even if what they say is correct, they still had time to at least explore that as an option. They knew that if they moved lenders they’d incur an ERC. I know they were in a difficult position. But they reasonably could have taken steps to mitigate any loss by continuing to pursue the application with lender H either directly or with another broker. I note the advice given by the new broker was on the basis that lender H would not lend Mr D and Mrs V the amount they needed. It is not clear if they were aware that lender H was prepared to consider an application if they could verify their income. And the mortgage they ended up taking was completed without taking Mr D’s income into account. Overall, for the reasons set out above, I do not see how I could fairly decide that PRIMIS should refund the ERC. But I have found that the broker did not communicate lender H’s requirements in a way that was clear, fair and not misleading. It was clearly already a stressful time for Mr D and Mrs V. But Mrs V has explained how she was “traumatised” by the way she was treated by the broker and the shock of finding out at late stage lender H’s requirements. She said that led to her being unable to sleep at night. There was almost three months of uncertainty where the broker did not set out the correct requirements to Mr D and Mrs V. That has clearly had a significant impact on them, particularly Mrs V. There is also the ongoing upset and belief that things might have turned out differently had they been given the correct information – although for the reason I have explained, the broker is not entirely responsible for that. In all the circumstances, and taking into account our guidelines, I consider PRIMIS should pay Mr D and Mrs V £650 to reflect any distress and inconvenience this matter has caused to them. PRIMIS said that while there were points it did not agree with it agreed to pay £650 to settle this matter. Mr D and Mrs V did not accept my provisional findings. They responded to make a number of points, including: • I’d found the broker had not kept adequate records of his communication with Mr D and Mrs V. But Mr D and Mrs V had given consistent testimony along with documentary evidence to support what they said. They did not understand why the broker’s account had been given more weight than their own. • They were referred to an accountant in July 2024. But the referral was in respect of personal tax matters, which were not relevant to the lender’s stated requirements – not for independent sign off of the accounts. • The broker had not acted in line with the Consumer Duty. Mr D and Mrs V were not told the lender needed signed off accounts until late September 2024. That was several months after the application had begun and affected their ability to meet the lender’s requirements. • If they’d been told about the requirement for independently signed off accounts in May or June 2024 they would have had enough time to get them. But because of the delay it was no longer feasible to meet that requirement within the required timeframe. The

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broker advised them there was no longer sufficient time, which led to the decision to proceed with a different lender. They lost the opportunity to meet the lender’s criteria. • It is speculative to say that the lender might have declined the application even if signed accounts had been provided. The questions should not be whether the application would have succeeded but whether they were denied the opportunity to properly pursue it. • They acted in line with the broker’s professional advice, including being told there was insufficient time to proceed. It was not reasonable to suggest they should disregard that advice or independently reconstruct the lender’s requirements. They have provided a text message from the broker where they said “we just don’t have the time” to obtain independently signed off accounts. They only went with a different lender because of what the broker said. • The proposed award of compensation for distress and inconvenience does not adequately reflect the duration of the issue, the impact of the unclear and delayed communication and the loss of the realistic opportunity to meet the lender’s requirements. The conclusion that the broker is not responsible for the financial consequences relied on assumptions rather than the evidenced facts. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. I am sorry if my provisional findings were not clear. I accept Mr D and Mrs V’s account of what happened. For the reasons I have already explained, I accept that it is more likely than not they were only told about the requirement for independently signed off accounts in late September 2024. However, just because the weight of the evidence supports what Mr D and Mrs V have said and they have not been treated fairly it does not automatically mean that it would be fair and reasonable for me to say that PRIMIS should refund the ERC they paid. As I explained in my provisional decision, where a business has made an error we usually try and put the affected party back in the position they would have been in had the error not occurred. The only way Mr D and Mrs V could have avoided the ERC is if they obtained independently signed off accounts and lender H assessed them and approved the porting application. It is possible that if the broker had told Mr D and Mrs V about the need for independently signed off accounts that they would have obtained them and provided them to lender H. But if that had happened, I do not know what the signed off accounts would have shown, how lender H would have interpreted them or what its decision would have been. In those circumstances, I do not see how I could fairly conclude that it was more likely than not that lender H would have approved the application. I do not have enough information to make that conclusion. Just because another lender was prepared to lend the amount needed, it does not follow that lender H would do so. While I accept that the broker told Mr D and Mrs V that they “just did not have the time” to pursue the application, that was reflecting what Mr D and Mrs V had said. There is nothing to support that the sale and purchase were going to fall through if things were delayed or that there was any particular urgency to complete. And while Mr D and Mrs V said they were relying on the broker’s professional advice, on the other hand they have told us they had lost confidence in proceeding with the broker and sought advice from a different broker. I n the

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circumstances, I do not see how at that point they could have placed much weight on what PRIMIS told them. In any event, the problem I have is that the evidence we have shows that Mr D and Mrs V told the new broker that lender H “declined [their] application because it was not affordable.” The new broker’s recommendation was based on the ERC being payable because lender H would not lend them the required amount to buy their new home. But that is not accurate. Lender H was still prepared to lend, subject to receiving independently signed off accounts that supported the new mortgage being affordable. If Mr D and Mrs V had told the new broker the correct position, they may well have advised them to continue with the application with lender H to avoid the ERC. I also note that Mr D and Mrs V borrowed more (£337,500) through the new broker, than the original recommendation with PRIMIS (£318,750). In all the circumstances, I do not consider it would be fair for me to say that PRIMIS should refund the ERC to Mr D and Mrs V. That is not to let the broker off for his poor conduct. Rather it reflects that it is not sufficiently clear that lender H would have approved the application had independently signed off accounts been provided. And even if that is not right, there was still time for Mr D and Mrs V to pursue the application with lender H through a different broker. That leaves compensation for distress and inconvenience. Our guidelines say that an award up to £750 might be fair where the impact of a business’s mistake has caused considerable distress, upset and worry – and/or significant inconvenience and disruption that needs a lot of extra effort to sort out. Typically, the impact last over many weeks or months. In view of what Mr D and Mrs V have told us about the impact of this matter on them and the time they wasted on the application, I think an award of £650 is fair and reasonable in all the circumstances. I understand why Mr D and Mrs V will be disappointed with my findings., but I hope they can understand why I have reached these conclusions. My final decision My final decision is that First Complete Limited trading as PRIMIS Mortgage Network should pay Mr D and Mrs V £650. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr D and Mrs V to accept or reject my decision before 14 May 2026. Ken Rose Ombudsman

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