Nationwide statement on trackers - no more rate cuts - HBOS next?

freebo_2 · 2 January 2009 at 10:49AM

http://www.ft.com/cms/s/0/a3919ada-d8a2-11dd-ab5f-000077b07658.html

I'd bet that the other trackers which didn't use their collar last time (e.g. HBOS) will follow suit.

The thing is, immediately after the last rate cut Nationwide said they'd be enforcing the 2.75% floor/collar, then the FSA pointed out that if it wasn't in the Key Facts Illustration (and its not in mine) it shouldn't be enforced as it was "misleading small print" (or words to that effect).

So what's different this time? If the base rate goes below 2% (seems likely), affected borrowers shouldn't just take this lying down but should make a representation to the FSA, possibly organised via this website.

Nationwide also say that enforcing the floor at 2% is "to protect savers" but then they also go on to say that there's "no guarantee savings rates may fall". The only thing they're trying to protect is their profits on this particular product, which is a small portion of their overall business.

Bottom line, they sold a product on the basis of an inetrest rate differential to the BoE base rate, left a get out clause in the small print - but cruicially missed that out from the Key Facts Illustration, and now it turned out to be a bad bet on their behalf they don't want to pay out in full. I'm sure that people who took out high long term fixed rates earlier in the year would like a similar opt-out.

As this could well affect all tracker customers can Martin comment on using the site to orgainise a response?

Cheers,

Freebo

feisty1 · 2 January 2009 at 10:59AM

Mike: If yr saying it's not in yr KFI???..........what date was yr tracker arranged?
Just to reconfirm, it's not in yt KFI but in yr T&C's, ye?

mystic_trev · 2 January 2009 at 12:11PM

Of course Nationwide have the option of calling in your Loan!

From TMF

Yes, if you insist, we will follow the base rate with the trackers; but as they are now uneconomic, we will call in the loans early. Take your pick.

Gorgeous_George · 2 January 2009 at 12:26PM

You can't get a quart into a pint pot.

The banks were wrong to expose themselves to the risk but watching them go bankrupt is not the solution. Some banks tried to mitigate the risk (of low rates) by writing collars into their t's and c's and they should be allowed to use these clauses. At the time, it may not have been considered to be a Key Fact. Even without these clauses, the banks can change t's and c's if it wishes.

If tracking to zero is unaffordable then they need to do something. Instead of crying foul, suggest something constructive.

I'd happily allow a collar in return for a cap or a cash sum or shares. I'm not with Nationwide. The banks need to get together and agree a way forward if we are to avoid the problem of savers jumping ship to the last bank to take action.

GG

Ian_Griffiths_Halifax · 2 January 2009 at 12:29PM

I have been having a battle with Nationwide since they announced that they were removing the floor on their trackers.

In their online statement they said that they would be removing the floor 'in the current financial climate' or words to that effect. My argument was that they could revoke this and I had a client who was thinking of changing to another lender because the other lender didn't have a floor.

I could not get Nationwide to remove the floor from the offer letter, and I couldn't get them to give me a letter confirming that it was being removed permenantly, all they would do is repeat what was said on the website.

I told the clients, I wouldn't trust ANY Bank or Building Society in the current climate, and look what they've done.

This client will be completing next week! As I've said to them, you can only go by what's in the KFI and Offer Letter. You can't rely on a Press Release or something you hear on the grapevine. Unless you get something in writing it's not enforceable.

All liars to boost their sales when it suits them and the FSA and the Governement are letting them get away with it.

MrMicawber_2 · 2 January 2009 at 1:00PM

Why should the banks and building societies be obliged to remover the floors on their products. We all signed up to them and this sort of product info is not exactly hidden in the small print. Don't people think that they have a personal responsibility to manage their own affairs in all this? Why, for so many people, is it always somebody elses fault?

I'm on a 2yr fix which matures in July. It's over 5% (more fool me you might say - but taking fees et al into account it was a solid deal at the time). I'd love the Nationwide to allow me to transfer penalty free to another product but the point is that I like thousands of others signed up to it.

Why is it that so many people seem to think they have a divine right to the lowest available mortgage rate and the highest available savings rate. This ridiculous negative margin, fuelled partly by customer greed and partly [a lot] by corporate greed is what has put us where we are now.

Ian_Griffiths_Halifax · 2 January 2009 at 1:08PM

If a Mortgage has a Collar which is stated in it's KFI and Offer Letter, then it is part of the deal that somebody commits to. The lender is doing no wrong by enforcing it.

If it's in the T&C, then they are hiding a Key Fact and so it shouldn't be enforceable as the borrower may not have taken the mortgage out if he had known.

kittykat8 · 2 January 2009 at 1:37PM

but what if they say in their KFI and Offer Letter that the terms and conditions don't apply like the abbey tracker, thay specifically stated that they were removing the collar

Marion

feisty1 · 2 January 2009 at 1:40PM

kittykat8 wrote: »

but what if they say in their KFI and Offer Letter that the terms and conditions don't apply like the abbey tracker, thay specifically stated that they were removing the collar Marion

Who, nationwide or abbey?

kittykat8 · 2 January 2009 at 1:43PM

abbey stated in offer letter and keyfacts that the collar mentioned in they terms and conditions booklet did not apply so have the abbey have no collar at all as it has been waived in the keyfacts and offer letter

marion

Ian_Griffiths_Halifax · 2 January 2009 at 1:46PM

kittykat8 wrote: »

abbey stated in offer letter and keyfacts that the collar mentioned in they terms and conditions booklet did not apply so have the abbey have no collar at all as it has been waived in the keyfacts and offer letter

marion

The KFI and Offer rule. They override the Terms & Conditions booklet, but in this case, they actually stated in the Offer Letter that there is no Collar. If they try and go back on this, they won't be able to enforce it.

Nationwide statement on trackers - no more rate cuts - HBOS next?

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