MSE News: Mortgage blow as building society hikes SVR

de1amo

i do think no matter which way any legal challenge goes-there will be no reason to 'recount to this legal case in the future because no BS or bank will make such a naive Guarantee without a counter 'exceptional circumstances'clause--if this goes the building societies' way and they continue they have had an awful lot of negative press which will cost them dear!!

sarahbennett

Thrugelmir wrote: »

Without doubt it would be raised in the defence case in the event of a court case. Directors have legal responsibilities as to how the Society is operated.

Presumably acting in the interests of all members?

MarkyMarkD

Yes. And allowing the Society to go bust clearly isn't in the benefit of all members, even if it benefits the (very small) proportion of the members who are borrowers with SVR mortgages.

sarahbennett

Robbing post offices to line the Society's coffers would also benefit all members but it would not make it legal. It's irrelevant what proportion of members are borrowers. The point is the guarantee has been broken, and it is not legal (I don't think anyway), but we'll find out via intermediaries and the courts, as Dasilva said. If their argument is they must renege on their guarantee or face insolvency, their legal obligations shift from members to creditors (that would include SVR mortgage holders).

Anyway FYI, just got an official response back from FSA..."It may be possible that the matters you have raised may have an unfair contract terms element."

The_Dentist

I have sent a Skipton mortgage contract to the Unfair Contract Terms Team at the FSA and they have agreed to examine it (To be honest I was amazed such a team existed!).

The FSA with this cap on does not seem to have significant powers as such which will impact on existing borrowers and I presume going forward Skipton does not have the clause in question in its new mortgage contracts. However any sort of ruling would surely have persuasive implications.

The other thing that bothers me about this entire issue is the leaflet from the Society which accompanies the letter intimating to borrowers that the SVR Cap guarantee is being scrapped. It has been mentioned briefly by others but several of the sections are in reality the Society laying out its legal justification for SVR Cap revocation. The Society goes on about this is some detail, quoting the clause in full, indicating to borrowers where they may find their clause in their mortgage documents, and explaining how the Society has the power of SVR Cap guarantee revocation. The Society then goes straight on to say that its board has met and defined what "exceptional circumstances" means.

What bothers me is that both in content and context the leaflet implies the Society has the right to retrospectively define "exceptional circumstances" . The contract does not say that expressly and I am not sure it can even be implied. Why does the Borrower or a third party not have the same right to define this term in the absence of written agreement on who can define this term retrospectively?

I think that morally if the Society chooses to lay out its legal basis for SVR Cap revocation it should do so in full. It is not reasonable if the Society has chosen freely to lay out its legal basis to do so only partially - it must do so in full. I think that the leaflet is therefore misleading and does not treat borrowers fairly, all in terms of FSA principles, policy and guidance. I have already complained to the Society generally but I felt this point was one which should be referred immediately and directly to the FSA as the Society has an obligation to make all communications clear, fair and not misleading. The FSA has responded by indicating it has passed this complaint to the team within the FSA who supervise the Society.

VIGILANT22

Do you seriously think in this current climate...skipton would NOT have held discussions with the FSA......
the FSA would have been in discussions with Skipton LONG before this decision was taken???? .........believe me........

They're all in bed together.....the FSA are bankers for bankers...you can replace any letter there you wish.....

They'll be disbandoned anyhow when cameron come to power...that's why the boss of the FSA gave 6 months notice last month....jumping before being pushed.....

MarkyMarkD

sarahbennett wrote: »

Robbing post offices to line the Society's coffers would also benefit all members but it would not make it legal. It's irrelevant what proportion of members are borrowers. The point is the guarantee has been broken, and it is not legal (I don't think anyway), but we'll find out via intermediaries and the courts, as Dasilva said. If their argument is they must renege on their guarantee or face insolvency, their legal obligations shift from members to creditors (that would include SVR mortgage holders).

Anyway FYI, just got an official response back from FSA..."It may be possible that the matters you have raised may have an unfair contract terms element."

Sarah

I wish you wouldn't persist in your strange claim that Skipton owe YOU money as a result of you borrowing at their SVR. It simply makes no sense. You haven't built up an asset with Skipton by somehow overpaying on a "normal" rate. You've paid the rate which was contractually due - end of story.

If your actions make Skipton go bust (and they weren't rescued by someone else - which of course will inevitably be the case) you won't get anything out of it. The savers would be repaid by the FSCS or the government. Other creditors would get nothing. That's what happens in most liquidations.

MarkyMarkD

The_Dentist wrote: »

I have sent a Skipton mortgage contract to the Unfair Contract Terms Team at the FSA and they have agreed to examine it (To be honest I was amazed such a team existed!).

The FSA with this cap on does not seem to have significant powers as such which will impact on existing borrowers and I presume going forward Skipton does not have the clause in question in its new mortgage contracts. However any sort of ruling would surely have persuasive implications.

The other thing that bothers me about this entire issue is the leaflet from the Society which accompanies the letter intimating to borrowers that the SVR Cap guarantee is being scrapped. It has been mentioned briefly by others but several of the sections are in reality the Society laying out its legal justification for SVR Cap revocation. The Society goes on about this is some detail, quoting the clause in full, indicating to borrowers where they may find their clause in their mortgage documents, and explaining how the Society has the power of SVR Cap guarantee revocation. The Society then goes straight on to say that its board has met and defined what "exceptional circumstances" means.

What bothers me is that both in content and context the leaflet implies the Society has the right to retrospectively define "exceptional circumstances" . The contract does not say that expressly and I am not sure it can even be implied. Why does the Borrower or a third party not have the same right to define this term in the absence of written agreement on who can define this term retrospectively?

I think that morally if the Society chooses to lay out its legal basis for SVR Cap revocation it should do so in full. It is not reasonable if the Society has chosen freely to lay out its legal basis to do so only partially - it must do so in full. I think that the leaflet is therefore misleading and does not treat borrowers fairly, all in terms of FSA principles, policy and guidance. I have already complained to the Society generally but I felt this point was one which should be referred immediately and directly to the FSA as the Society has an obligation to make all communications clear, fair and not misleading. The FSA has responded by indicating it has passed this complaint to the team within the FSA who supervise the Society.

Dentist

You are living in a strange world if you imagine that parties seeking to rely on their contractual terms are required to give a full legal case to the other party to the contract.

If there is any need for such chapter and verse it will be given to the FSA and/or the courts, not to thousands of borrowers 99.9% of whom will not understand it.

sarahbennett

VIGILANT22 wrote: »

Do you seriously think in this current climate...skipton would NOT have held discussions with the FSA......
the FSA would have been in discussions with Skipton LONG before this decision was taken???? .........believe me........

Believe you, on what basis?

sarahbennett

MarkyMarkD wrote: »

Sarah
You've paid the rate which was contractually due - end of story.

It would indeed be the end of the story if Skipton sought to recover the interest from me at the rate at which it was contractually due - end of story, as you put it ...

As for Skipton going bust, like I said there is nothing remotely exceptional about people going bust because they can't meet their financial obligations. I will repay Skipton at the rate the money is contractually due - end of story... you claim that Skipton had the right to unilaterally define exceptional circumstances any way they saw fit and retrospectively? I claim they did not, that in line with unfair contract legislation, they had drafted this term themselves and any interpretation of it therefore should be to the consumer's benefit not theirs. The legislation is quite clear on this point.

Skipton will not avoid a test case, a determination order, FSA and FOS investigations (I happen to know this for a fact). This will end up costing Skipton more money than just backing down in respect of those borrowers they have that guarantee agreement with...

I urge any Skipton mortgage customers to send a copy of your contracts to the Unfair Terms division of the FSA:

Please remember to: send a copy of your whole contract (sometimes called the terms and conditions) to:

To the following address:
Unfair Contract Terms Team
The Financial Services Authority
25 The North Colonnade
Canary Wharf
London E14 5HS

Explaining why you think the exceptional circumstances term is unfair. Be careful here, my advice is to not give any examples of circumstances you think may be exceptional, or any other information that is not needed to make the case that: (1) the Society drafted this term, (2) you feel it is now invoking it unreasonably, (3) it seems to think that it can unilaterally and retrospectively define the term, and (4) you feel that this term affects the balance of powers between you as a consumer and the society. You may also want to add that in your view you were offered a guarantee.

You may also want to draw the FSA's attention to the webpage announcement "http://www.skipton.co.uk/mortgages/svr/ourSvr.aspx" specifically this clause: "provided no other exceptional circumstances have arisen in the meantime."

The FSA recently ruled against a "any other valid reason" term in mortgage contracts by Intelligent Finance, a division of Halifax Plc (see http://www.moneymadeclear.fsa.gov.uk/news/product/unfair_contracts/unfair_contracts.html). This would seem a similar "try on" to that case. Proves the FSA are not completely useless, but guys, it may well be a numbers game, I think every single letter and contract they get sent on this will help...

"What did we think was unfair?
A term allowed the firm to increase a charge, but did not specify what the valid reasons were for doing so, or allow customers to exit the contract freely.
Why did we think it was unfair?
It was not clear to customers why the charge they had to pay would be increased. It also appeared to give the firm freedom to use any reason to increase it, even if it was not connected to the mortgage or to the redemption of the mortgage.
What has the firm done?
They have deleted this term, and no longer have the right to vary charges without first specifying what the valid reasons are.
Old term
'We can change the amounts we charge you, make new or different charges and change the way you have to pay charges. We may do this to reflect changes to the cost of doing the work or providing the services' … 'or for any other valid reason'."