Goodall v Santander UK Plc & Anor

A lender may reasonably rely on information supplied by a regulated intermediary or independently verified by the borrower’s employer when assessing mortgage affordability, unless the circumstances give reasonable grounds for doubt. Minor discrepancies in application documents do not require further investigation where they are neither suspicious nor material.

A breach of affordability rules would not, in any event, cause loss arising from the borrower’s later, unsuccessful investment of the mortgage proceeds. The investment decision, rather than the mortgage lending decision, caused that loss. A claim under section 27 of the Financial Services and Markets Act 2000 is not engaged where the regulated activity was carried on by an authorised intermediary, even if its employee or agent lacked separate authorisation.

The claimant sought damages under the Mortgage Conduct of Business Rules and a declaration under section 27 of the Financial Services and Markets Act 2000 that his mortgage was unenforceable. He alleged that the lender had relied unreasonably on inaccurate income information supplied by the intermediary and his employer, and that the intermediary’s employee was an unauthorised person.

The lender applied for summary judgment or strike-out. The court also considered limitation, issue estoppel, collateral attack and abuse of process, in light of earlier proceedings concerning the mortgage, possession and related allegations.

1. Disposition. The claim was struck out in its entirety. Alternatively, the first defendant was entitled to summary judgment on the whole claim. The conclusions were reached independently of issue estoppel and abuse of process.
2. MCOB Rules. Rules 4.4.1(c) and 4.7 applied only to advised sales and were irrelevant because the Bank had not advised the claimant. Rule 11.3.2 added nothing because the Bank had not relied on self-certification and had obtained income verification from the employer. The material provisions were rules 2.5.2 and 11.3.1.
3. It was reasonable for the Bank to rely on information from the regulated intermediary and on independent confirmation from the employer. Nothing in the amended date, the documentary discrepancies, the reference to a re-mortgage, the possible self-certification wording, or the Companies House information gave reasonable grounds for suspicion. The Bank was not required to investigate the employer’s incorporation date or take further steps to verify income. Internal policy arguments did not assist the claimant.
4. Even if an MCOB breach had been established, the claimed loss was not caused by any affordability assessment. The claimant lost money because his investment in S&SM failed. The mortgage was no more than an occasion in the chain of events and was too remote in law to be the cause of that loss. There was no real prospect of establishing recoverable loss.
5. The MCOB damages claim was also barred by section 9 of the Limitation Act 1980. Section 32 did not postpone limitation because the claimant had known from the outset the income figure used in the affordability assessment and had identified no material concealment.
6. Section 27 claim. SIS, not Mr Turner personally, was the authorised person carrying on the regulated activity. Mr Turner was its employee, agent or representative. Any issue concerning approval of such persons arose, if at all, under sections 59 and 71 of the Financial Services and Markets Act 2000, not section 27. Acting outside authority or providing incorrect information did not engage section 27.
7. The repeated MCOB allegations constituted an abuse of process. The section 27 claim was also a collateral attack on earlier final decisions and possession orders, and was struck out on that additional basis.

First-instance decision. The judgment records earlier First-tier Tribunal, county court and possession proceedings, but no appeal from the present decision.