Mortgage Advisor Wins No-Loan-No-Fee Dispute


A mortgage adviser who sent an invoice for an unsuccessful loan won a dispute.

Tuesday, July 19, 2022, 2:32 p.m.

by Eric Frykberg

This came after the Financial Dispute Resolution Service (FDRS) arbitration found that the no-loan-no-fee rule did not apply.

The case involved a man with an existing mortgage who applied for a second loan from another lender to subdivide his property.

He signed a service agreement which stated that generally the client did not have to pay any fees, as the payment to a broker came from a commission from a bank or non-bank lender.

But the deal fell through after the lender asked for a certificate of insurance which the borrower refused to provide.

His reasoning was that he didn’t want the bank with his existing mortgage to know he was looking for a second loan.

The offer for this second loan was then withdrawn.

The mortgage advisor then sent the client an invoice asking for $750 plus GST, which the client refused to pay.

The broker then began to pursue the debt, leading the client to contact FDRS, complaining that he had been bullied into paying a fee he did not owe.

In addition, he requested reimbursement of the costs incurred to obtain an appraisal of his property for loan purposes.

FDRS went straight to arbitration and ruled in favor of the mortgage advisor and ordered the client to pay the bill.

The arbitrator found that the mortgage provider had provided the requested services and that there was insufficient evidence that the client had been misled or given bad advice.

He added that the client’s existing mortgage compliance and insurance requirements were subject to his pre-existing agreements and it was his responsibility to meet those obligations.

The arbitrator added that the service agreement could have been better drafted, but clearly listed fixed fees to be incurred when the no-loan-no-fee rule did not apply.

Tags: Financial Dispute Resolution

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