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MSE News: Mortgage blow as building society hikes SVR
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(and I know others will accuse me of speculating without knowledge, and in this case, they are quite right
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Dont worry, most of us dont care anymore! LOL"Banking establishments are more dangerous than standing armies." Thomas Jefferson
"How can I believe in God when just last week I got my tongue caught in the roller of an electric typewriter?" Woody Allen
Debt Apr 2010 £00 -
MarkyMarkD wrote: »I agree, Sarah.
At the very least, (and I know others will accuse me of speculating without knowledge, and in this case, they are quite right), Skipton will have received counsel's opinion that they are at least more likely than not to win any legal fight on this. To have gone ahead without that would be ridiculous and their Board of directors would not have approved it.
I think I almost agree. But I speculate their advice would have been loss/risk focussed. What would they have had to lose? If they had lost the legal case they'd be in no worse position than they were at the beginning. Further, in UK law, there's no automatic opt in for group actions as there is in the states, so any losses would be limited to those in the action group. I think these would have likely been considerations...0 -
I'm also not sure how you figure a lost case would bust the Skipton especially in the circumstances of opt in that we have in the UK. As far as I can see they can carry losses on these mortgage accounts a while longer, have a significant asset buffer, and in any event the option to demutualise lies before any insolvency proceedings? Please help me out here, how would their losing this case lead to an inevitable insolvency? for me, the figures don't add up.
A mortgage book at 3% above Base Rate is not such an unsellable asset, most people would be delighted with 3.5% on money atm surely?0 -
MarkyMarkD wrote: »I agree, Sarah.
At the very least, (and I know others will accuse me of speculating without knowledge, and in this case, they are quite right), Skipton will have received counsel's opinion that they are at least more likely than not to win any legal fight on this. To have gone ahead without that would be ridiculous and their Board of directors would not have approved it.
And, similarly, the FSA will have demanded to see that counsel's opinion before letting Skipton proceed, and may indeed have got their own counsel's opinion if push came to shove.
So, we have expert opinion on both sides, saying that the other side is wrong. Such are many legal battles!
But, in this case, (once again, like many others), Skipton have deeper pockets and far more to loose than any individual borrower or even any group of borrowers.
And the Government (OFT or whoever) are unlikely to pursue such a claim because, whatever the borrowers may say, it is NOT in the public interest for Skipton to go bust, and that's what will happen if they lose this case. It's not in the public interest, because the loss at Skipton will end up being borne by the FSCS and hence by other financial institutions who are already suffering from the previous calls on the FSCS.
So: deep pockets at Skipton vs shallow pockets and no government support on the borrowers' side. I know which side I'd place my bet on.
All the above is without any consideration of the legal and moral rights and wrongs, but I think it's a realistic assessment of what's likely to happen.
MarkyMarkD,
Please look up the "Ford Pinto" scandal for an insight into how companies do the maths when it comes to bean-counting liability exercises. In short, it's a case of "What is the risk of the occurrence? If said risk materialises, approximately how much would we have to pay out to a small number of potential claimants? Is it cheaper to allow the risk to materialise and pay any claims than it is to do a full product recall, change in rate policy etc..."
Skipton's legal advice would have been on similar lines. Run the risk. Yes you'll have to make a few payouts to those claimants who have the funds for court or the legal expertise to contest the rate rise but agree on an out of court settlement e.g. a "Without Prejudice" offer of settlement, an ex gratia payment in respect of the loss by the claimant with no admission of liability. Make the offer conditional upon the signing of a non-disclosure agreement.
Skipton's potential losses acting on legal advice to this effect would be restricted to a couple of million total perhaps for legally savvy and well funded borrowers.
Skipton's potential losses if it were to lose the case at court would run into the tens of millions. Do remember that the result of a case goes into the public domain whilst a properly drafted private offer of settlement will remain just that, PRIVATE.
Mark, it might be worth you reading up on the concept of legal privilege. It is unlikely that the FSA would have DEMANDED to see Skipton's legal advice (it is legally privileged material). It has no right to demand anything of the sort. Whilst Skipton can waive privilege, it cannot be obliged to do so UNDER ANY CIRCUMSTANCES.
You are right about one thing though. Civil cases are wars of attrition and the party with the deepest pockets usually (and I say usually) wins.
(IANYL)0 -
sarahbennett wrote: »I'm also not sure how you figure a lost case would bust the Skipton especially in the circumstances of opt in that we have in the UK. As far as I can see they can carry losses on these mortgage accounts a while longer, have a significant asset buffer, and in any event the option to demutualise lies before any insolvency proceedings? Please help me out here, how would their losing this case lead to an inevitable insolvency? for me, the figures don't add up.
A mortgage book at 3% above Base Rate is not such an unsellable asset, most people would be delighted with 3.5% on money atm surely?
Nobody is going to pay a premium over book value for tracker mortgages at those rates, so they would only be sellable at a loss.
And why would anyone buy mortgages earning 3% over BBR - with no tie-ins - when they can initiate their own lending at higher rates?
Your class action points are fine, but the FSA - if Skipton were to lose - wouldn't allow them to simply pay the claimants. They would make them pay every borrower on those terms. That is why it would be an insolvency issue.
And I am uncertain why you see demutualisation as helping in the slightest. If Skipton did not have the capital to continue as a going concern, it wouldn't have time to go through the lengthy demutualisation process - it would be closed down by the FSA well before that.0 -
howardtheduck wrote: »MarkyMarkD,
Please look up the "Ford Pinto" scandal for an insight into how companies do the maths when it comes to bean-counting liability exercises. In short, it's a case of "What is the risk of the occurrence? If said risk materialises, approximately how much would we have to pay out to a small number of potential claimants? Is it cheaper to allow the risk to materialise and pay any claims than it is to do a full product recall, change in rate policy etc..."
Skipton's legal advice would have been on similar lines. Run the risk. Yes you'll have to make a few payouts to those claimants who have the funds for court or the legal expertise to contest the rate rise but agree on an out of court settlement e.g. a "Without Prejudice" offer of settlement, an ex gratia payment in respect of the loss by the claimant with no admission of liability. Make the offer conditional upon the signing of a non-disclosure agreement.
Skipton's potential losses acting on legal advice to this effect would be restricted to a couple of million total perhaps for legally savvy and well funded borrowers.
Skipton's potential losses if it were to lose the case at court would run into the tens of millions. Do remember that the result of a case goes into the public domain whilst a properly drafted private offer of settlement will remain just that, PRIVATE.Mark, it might be worth you reading up on the concept of legal privilege. It is unlikely that the FSA would have DEMANDED to see Skipton's legal advice (it is legally privileged material). It has no right to demand anything of the sort. Whilst Skipton can waive privilege, it cannot be obliged to do so UNDER ANY CIRCUMSTANCES.You are right about one thing though. Civil cases are wars of attrition and the party with the deepest pockets usually (and I say usually) wins.
(IANYL)0 -
MarkyMarkD wrote: »Don't agree, at all, for the reasons in my reply to Sarah. There's no way, in a million years, that Skipton could buy off all of hundreds of claimants and get them all to keep it quiet. And there's no way the FSA would allow them to do so.
No, you're wrong. The FSA are the regulator and they can demand access to anything, in order to allow Skipton to do what it wanted. So, Skipton would have had to waive privilege to get its way.
Swoon - we agree on something at last!
"Swoon"
I do have that effect on people. Just like MarkyMarkD, they find themselves inebriated by the exuberance of my verbosity.
Oh, and just to reiterate, YOU'RE WRONG!! Regulator or not, the FSA CANNOT DEMAND to see legally privileged material. They can merely REQUEST sight of it e.g. if the FSA's enforcement division is carrying out an investigation, it may be the case that the subject of the investigation will WILLINGLY provide material that is subject to privilege. However, as I have said before, the FSA CANNOT DEMAND it.
There is a big difference between REQUESTING AND DEMANDING.
For example:
a) A polite REQUEST for a donation.
b) A legal DEMAND for payment. You don't go around DEMANDING donations (at least not unless you're Sir Bob "Give us your f*cking money" Geldoff).0 -
There's a difference between the legal ability to demand something, and the practical ability to demand something. Whilst the FSA may not have the former, they certainly have the latter because they can make the delivery of said something a condition of granting their consent/not withholding their consent, and the distinction is therefore entirely academic.0
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MarkyMarkD wrote: »There's a difference between the legal ability to demand something, and the practical ability to demand something. Whilst the FSA may not have the former, they certainly have the latter because they can make the delivery of said something a condition of granting their consent/not withholding their consent, and the distinction is therefore entirely academic.
Oh of course MarkyMarkD, the concept of legal privilege is entirely academic. Where the hell did you go to law school? Oh yeah, I'm sorry .... you didn't.
Why do you constantly seek to defend an untenable position? The FSA absolutely, irrefutably, CANNOT (Get it? CANNOT!!!) demand to see material that is subject to legal privilege. The FSA is NOT ALLOWED (no regulatory body or judicial body for that matter!) is allowed to demand or otherwise require access to material that is legally privileged as a condition or pre-requisite of ANYTHING!!!
To hold otherwise would negate the very concept of legal privilege!!
SarahBennett was right about you. You know next to nothing (especially as regards the legal dimension!) but you mask your lack of knowledge and ignorance by being so ostensibly authoritative and dogmatic in your assertions that those less well versed in law on this thread (or the braindead like Thrugelmir and Vigliant22) end up actually believing your fallacies.
In future, kindly do a little research (like I suggested about reading up on legal privilege before discussing it) before you go making patently false assertions.
"The distinction is therefore entirely academic"? Please explain for the benefit of the readership of this thread how is it entirely academic when the FSA is CATEGORICALLY PROHIBITED (legally, practically or with the aid of magic fairy dust) from making the delivery of LEGALLY PRIVILEGED material a condition of granting/withholding consent?
Please answer my question in your response. That is a reasonable request. Do not seek to fudge the issue. Do not obfuscate, beat around the bush, or otherwise try to change the subject.
All you have to do is just answer the question. So answer it. You said "the distinction is therefore entirely academic". Please justify this statement given the above. Your false assertion in respect of the FSA and legal privilege stems either from ignorance (in which case your competence is called into question) or it is deliberate (in which case your credibility is called into question). So which is it?0 -
Legal privilege protects the client (Skipton) from having to disclose its legal advice, if it doesn't wish to do so. But if Skipton wants to get the FSA to do something which it would not otherwise do, as it did in this case, clearly it will co-operate in any way possible, i.e. by waiving its legal privilege and sharing with the FSA its legal advice.
I won't respond to the rest of HtD's daft comments. He can say what he likes about me. But all of his comments are from an entirely academic perspective and don't recognise the commercial reality of operating as a regulated entity, as Skipton have to.The FSA’s Principles require regulated firms and individuals to co-operate with the FSA in any event. But the FSA will view a firm more favourably if it provides additional co-operation over and above the norm, such as by providing documents or by waiving legal privilege over advice it has received from its lawyers.0
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