Housing Solicitors

A couple who were mis-sold a “foolproof” investment plan and ended up £376,000 in debt are to lose their home, despite not owing any mortgage arrears and the Financial Ombudsman Service finding in their favour.

The Daily Mail reports that Richard and Rita Kauffman will have their home repossessed by the firm running Britain’s bad banks – UK Asset Resolution (UKAR), set up by the Treasury to run down Britain’s bailed-out banks. The Treasury-run company will start proceedings to evict Mr and Mrs Kaufman next week.

The financial plan they invested in and which lost them their money is so complex that it is reported nothing can be done to help them. Mr and Mrs Kauffman from Oundle, near Peterborough, say that ten years ago they had £100,000 in savings – and an £158,832 interest-only mortgage for their £450,000 home.

Mr Kauffman, 69, is a music teacher and his wife Rita an acclaimed singer, but they were always “looking at ways to slow down”. In 2006, a friend suggested they speak to financial adviser Simon MacKenzie from Mint Financial Services to help reduce their bills and generate more income. Mr MacKenzie suggested they invest in a savings plan, the Integrity Cash Maximiser.

The couple were told this investment would pay off their mortgage, give them some extra savings and “it couldn’t fail”. The couple were happy to invest £50,000 of their savings –but were advised to extend their mortgage by £216,093 to £374,925 with Mortgage Express, part of Bradford & Bingley.

As part of the Integrity deal, they had to take out a separate £194,931 loan with Bank of Scotland – which now part of Lloyds Banking Group. The scheme meant the Kauffmans now had £461,024 in their name.
The capital was used to buy 22 traded endowment policies via Bank of Scotland – and to start paying the couple’s monthly income of £2,401, which would cover their £1,715 mortgage payment, leaving £686 to spend as they wished. The returns were supposed to boost their income – as well as paying off all the debts accrued, with a surplus as a bonus.

Integrity received around £15,000 commission for the deal and in November 2006, the couple received the first payment of £2,401, which continued for two years. However, the Kauffmans did not realise that the investments were losing appeal as a result of poor Stock Market performance. In 2009, Bank of Scotland advised them their investment was at risk – and suggested they invest a further £37,861. Mr and Mrs Kauffman refused and in November, their payments stopped and were unable to meet their mortgage repayments.
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They complained to Mint they’d been mis-sold and put into a product that was far too risky, but Mint rejected this. The Kauffmans went to the Financial Ombudsman Service – and in July 2010, the Ombudsman found in their favour. But the watchdog could only recommend a mandatory compensation limit of £100,000 – and to win more they would have to go to court. They settled out-of-court in August 2011 and won nearly £150,000 – but feel they were forced into settling. After two years, debt had swallowed their net compensation payment of 105,000.

UK Asset Revolution has now called in the entire £376,000 mortgage on their home – despite the couple not being in mortgage arrears – and if they do not pay this sum by 20 August, their home will be repossessed.

“What’s happened to us is shameful,” said Mr Kauffman.

“It has wrung the life out of us. We’re exhausted and desperate, working flat out in our late-60s to repay the debt.’

The firm recommended by Mint Financial Services that sold the multi-component “Frankenstein investment” – Integrity – went into voluntary liquidation in 2009 and was fined £350,000 by the City regulator in 2010. Mr Mackenzie died shortly after recommending the bond to Mr and Mrs Kauffman.

A UKAR spokesman said the company was “sympathetic” and repossession was “always a last resort”. The company says that over the last four years, it had provided “multiple options” to the couple to enable them to keep their home and repay the debt.

Mint Financial Services is now part of advice firm Intrinsic Financial Services and a spokesman said the compensation paid to the Kauffmans “exceeded the £100,000 limit that could be enforced at the time – and was accepted by the clients and their legal representatives as full and final settlement”.

A Bank of Scotland spokesman said:

“We did not provide any advice to the Kauffmans. Our role was limited to the provision of lending facilities to enable them to part-finance an investment in a bespoke portfolio of traded endowment policies. The investment was undertaken on advice from the clients’ own IFA.”


Duncan Lewis Property Solicitors

Duncan Lewis property solicitors can advise on debt management and mortgage repossession – including legal advice on the council’s obligation to re-house in cases of homelessness.

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In cases where Legal Aid is not available, Duncan Lewis offers competitively priced and fixed fee private client services for property and housing matters.

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For expert legal advice on property and housing, call Duncan Lewis property solicitors on 020 7923 4020.