MSE News: Mortgage blow as building society hikes SVR

The_Dentist

MarkyMarkD wrote: »

I'm sorry, but even if Skipton had included a clause saying "if our average cost of funds becomes higher than the guaranteed SVR level, the guarantee will cease to exist" you'd still be complaining that it was unfair. Wouldn't you?

I am complaining to Skipton and I don't think I would be if the above clause or similar appeared in my mortgage contract. This clause makes clear that the guarantee is conditional on the Society's ability to fund the mortgage whether that be on the wholesale markets or by retail deposits. Overall a clause like this seems fair/ reasonable for a mutual society which exists to allow its members to purchase a home. It seems unambiguous and gives an indication of when the guarantee will be revoked. I would also say that it complies with UCTA 1977 and subsequent regulations. I am far from convinced that "exceptional circumstances" complies with UCTA 1977.

sarahbennett

MarkyMarkD wrote: »

It is a widely held view that Skipton ripped up its contract, because journalists write what sells newspapers and don't research stories properly.

The Personal Finance Editor of the Daily Mail read the entire contract word for word and showed it to expert colleagues... sounds like pretty good research... You mention your interpretation of exceptional circumstances is linked to a recession. This does not affect banks and building societies only but everyone, with increased unemployment etc., and are precisely the circumstances in which interest rate cuts are normally seen to get more money circulating in the economy...

I have already cited some case law earlier, and invited your rebuttals but you seem unable to make any. I understand you are not a lawyer, I am not one either but google and a few minuteshould enable you to bring up some references in support of your otherwise unsubstantiated position.

You seem intelligent, but I can't help feeling the case you are arguing is for your own interests, you believe you are right because you want to believe it, not because it makes sense... why are you so ingrained of your own view? I take it you are not a borrower on a Skipton SVR? Are you a Skipton member or employee? Are you simply a saver? Or somebody with a fixed rate mortgage? If you think that not revealing your true name on a forum makes you impossible to trust, I feel the same way about not revealing you interests.

You obviously feel very strongly about this case, so, I must ask, what are your interests? I consider what Skipton has done to be very wrong, and as a consumer I feel cheated, defrauded in fact... I am quite well educated, and read the entire contract but I never read the "get-out" clause in the way you seem to, for example there was absolutely no qualification at all, it did not say "exceptional market conditions", or "in cases where exceptional financial difficulties were being experienced by the Society" or "exceptional difficulties for the Society's sector"... it just left it broad. Had it suggested for a moment it's arguments could be circular (track base rate unless it is low) I'd not have selected the product.

I wonder if you can't put yourself in someone else's shoes?

attilathehun

It would appear that there is some political support for the FSA involvement being discussed here as Lord Oakshott, the Lib Dem Treasury spokesman, has called for the FSA to examine the Skipton's decision to break the guarantee on the SVR. There is now also some potential legal action in the offing as London solicitors, Leon Kaye, are asking Skipton borrowers affected by this guarantee to register with the solicitor with a view to supporting a claim against the Skipton. If you are interested do a google search on Leon Kaye solicitors.

attilathehun

It seems strange that the Skipton applied the SVR guarantee to protect borrowers against unfavourable interest rate changes and is now citing an unfavourable (or should I say exceptional) combination of interest rates as its justification breaking the guarantee! I do not think this is defensible in court and, as many borrowers may be aware, the London solicitors, Leon Kaye, are now inviting Skipton borrowers to register on their web site with a view to making a claim against the society. Whatever the outcome it is unfortunate that Skipton Building Society's reputation, built up over a hundred years, is being destroyed by the actions of its current management.

MarkyMarkD

sarahbennett wrote: »

The Personal Finance Editor of the Daily Mail read the entire contract word for word and showed it to expert colleagues... sounds like pretty good research...

Obviously, I won't agree. Reading that a clause doesn't apply in exceptional circumstances, and then reporting that Skipton are "ripping up people's mortgage agreements" is an interesting interprtation of "doing pretty good research".

On the other hand, reporting "Skipton are applying a particular interpretation of a clause in their mortgage agreements as permitting them to disapply the cap on their mortgage rates" would have been accurate. Surely even you cannot disagree with that sort of wording?

You mention your interpretation of exceptional circumstances is linked to a recession. This does not affect banks and building societies only but everyone, with increased unemployment etc., and are precisely the circumstances in which interest rate cuts are normally seen to get more money circulating in the economy...

I didn't mention recession anywhere. And previous measures to get the economy out of recession haven't been coupled with circumstances in which savings rate and official bank rates have become completely out of kilter with each other. As previously posted, it is that disjointedness which is Skipton's problem, and that is an exceptional circumstance.

I have already cited some case law earlier, and invited your rebuttals but you seem unable to make any. I understand you are not a lawyer, I am not one either but google and a few minuteshould enable you to bring up some references in support of your otherwise unsubstantiated position.

Fine. Google away. I don't wish to, thanks.

You seem intelligent, but I can't help feeling the case you are arguing is for your own interests, you believe you are right because you want to believe it, not because it makes sense... why are you so ingrained of your own view? I take it you are not a borrower on a Skipton SVR? Are you a Skipton member or employee? Are you simply a saver? Or somebody with a fixed rate mortgage? If you think that not revealing your true name on a forum makes you impossible to trust, I feel the same way about not revealing you interests.

You obviously feel very strongly about this case, so, I must ask, what are your interests? I consider what Skipton has done to be very wrong, and as a consumer I feel cheated, defrauded in fact... I am quite well educated, and read the entire contract but I never read the "get-out" clause in the way you seem to, for example there was absolutely no qualification at all, it did not say "exceptional market conditions", or "in cases where exceptional financial difficulties were being experienced by the Society" or "exceptional difficulties for the Society's sector"... it just left it broad. Had it suggested for a moment it's arguments could be circular (track base rate unless it is low) I'd not have selected the product.

I wonder if you can't put yourself in someone else's shoes?

I've already said, I am neither a Skipton borrower nor saver. Nor do I have a fixed rate mortgage ... I have a Barclays lifetime tracker. (I've already said that in this thread). And yes, I have savings too. I'm personally benefitted from the disjointedness that I've referred to as my (wife's) marginal tax-free savings rate is a lot higher than my mortgage rate. The comment about "not revealing your true name" was someone else's, not mine, BTW.

And of course I can put myself in others' shoes. But that doesn't make me agree with them. Can you not put yourself in others' shoes, and understand that perhaps Skipton expressed their exceptional circs clause so that it was not triggered automatically by particular levels of base rate, or funding rates, or whatever? Or that they deliberately refrained from exercise the clause, despite many months in which the financial markets have clearly been operating in an exceptional way?

I've already suggested that Skipton could have expressed its clause far more sensibly, e.g. by linking it explicitly to funding costs. But (and you haven't answered this) would you not still have considered that unfair? You seem to think that their excessive funding costs are their own fault.

I'm quite willing to leave you to pursue your campaign, the only consequence will be that Skipton is forced out of business and another mutual will bite the dust. That won't be a great outcome, but at least you'll have avoided paying the extortionate rate of 4.95% on your mortgage. :rolleyes:

Thrugelmir

MarkyMarkD wrote: »

I'm quite willing to leave you to pursue your campaign, the only consequence will be that Skipton is forced out of business and another mutual will bite the dust. That won't be a great outcome, but at least you'll have avoided paying the extortionate rate of 4.95% on your mortgage. :rolleyes:

Whilst this would the envitable outcome. Hard to envisage actually happening.

dasilva_2

Marky Mark posted in the northern rock thread 'NR were successful and solvent, but they had a seriously flawed business model which totally depended upon the continued availability of funding via securitisation. I have posted before that they could easily have avoided disaster by cutting back their pace of lending and keeping a buffer of funds available - hence stopping lending before "the music stopped" leaving them with a pile of new mortgages and no money to fund them.'
You seem to be the master of hindsight.
Unfortunately 'hindsight' has no place in contractual law. Skipton also had a business plan which involved selling a mortgage product with a guarantee.
Unfortunately they didn't plan for the bl*@ding obvious ie:rates can go down as well as up. So when they realised their plan was not working they opted for the 'exceptional clauses' plan.
So can I ask you 2 questions to which you can give a non 'politicians ' answer.
1. Should a contract include a clause that because it is undefined is so vague that it could mean anything?
2. Even if a contract does include such a clause, should only one party be able to define that clause at a later date to the detriment of the other party?
I really take on board most of what you are saying as to why the Skipton have done this but I actually agree with other people that what they have done has had the effect of 'tearing up their contract'.
You also state ''Im quite willing to leave you to pursue your campaign, the only consequence will be that Skipton is forced out of business and another mutual will bite the dust. That won't be a great outcome, but at least you'll have avoided paying the extortionate rate of 4.95% on your mortgage. :rolleyes:"
The consequences of this would be that the liquidator would have to sell these mortgage contracts with the guarantee still in the contract or the government bail them out just like NR That is of course assuming Skipton still hold the mortgage debt and have not securised it.

Charterhouse

Rates of 0.5% for a sustained period ARE exceptional, it's only a matter of whether the contract gives enough leeway or indeed the exit clause was given in the KFI.

dasilva_2

Charterhouse wrote: »

Rates of 0.5% for a sustained period ARE exceptional, it's only a matter of whether the contract gives enough leeway or indeed the exit clause was given in the KFI.

Funnily enough, I accept that rates of 0.5% for a sustained period are unusual, but would you not have expected a major financial institution who has promised to follow that rate to not have modeled for that eventuality because if it was me I would have worked out wether it was sustainable at 0% and if it wasn't, stated at the outset, at what level the guarantee fails.. But as I have stated that is not even how the Skipton have defined the exceptional circumstances that have prompted them to invoke this clause. They state (retrospectively, I hasten to add) that a rate of 2.7% or less is exceptional, even if for 1 day as there is no period of time in their definition. A well written contract allows no room for misinterpretation. A vague undefined term allows plenty of room for misinterpretaion, hence the need for the Unfair Contract Term Act because in a contract both parties are equal in law. Would the Skipton allow one of its customers to define an exceptional circumstance?
The contract should really have had in it an exceptional circumstances clause where the exceptional circumstance is defined by an independant third party or the clause was clearly defined at the commencement of the contract. Then there would be no argument.

[Deleted User]

MarkyMarkD wrote: »

I've already suggested that Skipton could have expressed its clause far more sensibly, e.g. by linking it explicitly to funding costs. But (and you haven't answered this) would you not still have considered that unfair? You seem to think that their excessive funding costs are their own fault.

Where the unfairness comes in is the fact that people don't believe that they are getting what they signed up for. Any qualification relating to the guarantee should have been stated in the KFI right next to any mention of the 3% guarantee. On top of that, the qualification should also have been explicit. I am sure that people are prepared to accept contract conditions if they know what they are beforehand rather than being told retrospectively.
Of course, when the next government gets in, they will also be quoting "exceptional circumstances" to put our taxes up.