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Mortgage adviser breaches agreement

Emma and Joel’s mortgage loan was arranged through a mortgage adviser. In mid-2021, the fixed interest rate period on their loan was coming up for renewal. The mortgage adviser advised them of the rates available with their lender. They selected the lender’s two-year fixed rate of 2.55% and notified the mortgage adviser. 

The mortgage adviser failed to pass on Emma and Joel’s instructions to the lender, and the interest rate on the loan was not fixed.

In November 2021, Emma and Joel discovered their loan was on a floating rate and contacted the mortgage adviser. The mortgage adviser contacted the lender about their current fixed interest rates, however rates had risen significantly since mid-2021. 

The mortgage adviser initially considered that the lender was at fault in failing to fix the rates in mid-2021. However, in December 2021 he accepted responsibility for the error.

In December 2021, Emma and Joel gave instructions to fix the interest rate at their lender’s current two-year fixed rate of 4.10%p.a.

The mortgage adviser said he would contact them early in the new year with a compensation plan for failing to arrange for the interest rate to be fixed in mid-2021.

Emma and Joel did not hear from the mortgage adviser early in the new year, and continued to prompt him for a response throughout January 2022. 

Eventually, in mid-February 2022, an agreement was reached:  the mortgage adviser would pay Emma and Joel compensation of $12,000 to be paid at $500 per month for 24 months. This represented the difference in interest rates that Emma and Joel would have to pay due to the increase in interest rates between mid-2021 and December 2021.

The mortgage adviser made the first payment in April 2022 and nine further monthly payments.

Payments ceased in February 2022.

In May 2023, Emma and Joel discovered that the payments had stopped. The mortgage adviser had only paid $5,500 of the compensation amount, and $6,500 was outstanding.

Emma and Joel contacted the mortgage adviser numerous times over May and June 2023. In one reply, the mortgage adviser said there may be a problem with their automatic payment as he had changed banks, and that he would look into it. Emma and Joel continued to chase the mortgage adviser up for a response, however no substantive response was made. 

Emma and Joel then complained to FSCL. They explained that they had spent months of their lives chasing the mortgage adviser to no avail.


Emma and Joel complained that the mortgage adviser had breached the agreement reached with them in February 2022, and that he was failing to respond to them about the situation. They sought immediate payment of the $6,500 outstanding under the agreement.

As the mortgage adviser had not responded to Emma and Joel, FSCL did not know his position on the complaint. 


We notified the mortgage adviser about Emma and Joel’s complaint but, despite requests, the mortgage adviser did not respond to FSCL. We told the mortgage adviser that we would proceed to issue a preliminary decision on a specified date. The mortgage adviser contacted FSCL on the specified date to ask for a copy of the complaint so that he could respond.  He said he did not have details of the complaint. As both Emma and Joel and FSCL had given the mortgage adviser details of the complaint, we proceeded with a preliminary decision.

We considered the mortgage adviser had breached the agreement he had reached with Emma and Joel in February 2022. Further, he had given no notice nor explained to them the reason for ceasing payments. In the circumstances, we considered that Emma and Joel’s request that the complaint be settled by immediate payment of the $6,500 was reasonable, and recommended the mortgage adviser do so. 

Emma and Joel accepted the preliminary decision. Again the mortgage adviser did not respond.

We then issued a final decision. Emma and Joel accepted the final decision. We sent Emma and Joel’s settlement form to the mortgage adviser and asked him to pay the $6,500 within five working days, according to our usual process.. The payment was not made within five working days. The mortgage adviser eventually made the payment four weeks after the settlement form had been forwarded to him. 


Emma and Joel were pleased and relieved to finally receive the amount due to them.