MSE News: Skipton faces legal challenge over mortgage rate hike

Dan_1976

OK first thing, you have quoted "should" cant see this in my post?

The claus is in the contract, which is legally binding and should be approved by the FSA at least.

I do think, and I am not an expert on this, that this claus should only be invoked with approval of the FSA. IT is not the Skipton to decide if the economic climate is extreme or not.

Why should the larger institutes be saved, and the smaller not. One rule for one etc, not that I agree with any of it.

Saving and borrowing comes with risks, small or large, but risks.

As I have said, I dont agree with what they are doing and I am sure more will follow, but it is the sign of the times.

sarahbennett

Dan_1976 wrote: »

As a tax payer I would rather people pay a higher, but still very low, rate than pay millions of our money in to another broken lender!

Hi, you just said that you would rather that they pay a higher rate, your words were not "should"... did you mean that you'd rather they did, voluntarily? So they could opt in or out of doing so?

Dan_1976

No, I am saying you miss quoted me.

I am saying I would rather they pay not they should pay it, should implies that I agree with this and they should like it or lump it!

That will keep going in circles.

I am just saying it is a little unfair, but i see why they are invoking it.

sarahbennett

Dan_1976 wrote: »

No, I am saying you miss quoted me.I am saying I would rather they pay not they should pay it, should implies that I agree with this and they should like it or lump it! That will keep going in circles.I am just saying it is a little unfair, but i see why they are invoking it.

Ah... I see...okay...

[Deleted User]

Dan_1976 wrote: »

The claus is in the contract, which is legally binding and should be approved by the FSA at least.
I do think, and I am not an expert on this, that this claus should only be invoked with approval of the FSA. IT is not the Skipton to decide if the economic climate is extreme or not.

I don't believe that even the FSA have the right to define what constitutes exceptional circumstances and what doesn't.

VIGILANT22

CR10 wrote: »

I don't believe that even the FSA have the right to define what constitutes exceptional circumstances and what doesn't.

So who do you think does?...

Dan_1976

OK, so somebody from the Skipton sticks his head out the window wets his fingers, feels the wind and decides its a funny old economy at the mo?!?!

Somebody who has not interest needs to decide, if its not the FSA then it has to be the treasury or BOE?!

Gorgeous_George

If Skipton was a stock on the LSE it is likely that new shares would be sold and the shareholders would efectively fund the recapitalisation of the business.

As it is a mutual Building Society owned by the members then the members should fund the recapitalisation. Of course, savers would simply move their funds to other organisations leaving the remaining members (predominantly borrowers) to fund the shortage.

And yes, I am saying that it would be better to 'defraud' (if that is what it is) all borrowers a bit. Much better than the taxpayer bailing them out. We pay the legal profession £millions every year to advise us when we buy (and sell) houses (money for old rope IMHO). Perhaps it is the solicitors and conveyancers to whom Skipton's mortgagees should be directing their anger.

If the Tories win the next election it is possible that the Skipton case will be overtaken by events.

GG

[Deleted User]

VIGILANT22 wrote: »

So who do you think does?...

I think maybe I should have been more specific. Why should the FSA have the right to RETROSPECTIVELY define exceptional circumstances any more than Skipton. Surely the legality of a contract would be no different in either instance. Even regulators are not above the law.

sarahbennett

Gorgeous_George wrote: »

And yes, I am saying that it would be better to 'defraud' (if that is what it is) all borrowers a bit. Much better than the taxpayer bailing them out.

Did you read my last post re it's not the place for a building society to take the law into its own hands? you're not seriously suggesting it acceptable to apply a vigilante approach to consumer agreements in order to effect the best result for a company or building society? Do you have any idea what the implications of that even are? Effectively you would be condoning theft.

Skipton financials (correct me if I am wrong)
BBR + 3% is not a low rate, the current average ISA and savings account is not more than BBR + 1%, so there is a difference here of 2%. Add to that building societies can have up to 50% of their funding from wholesale markets (they don't rely on it all coming from savers) so can borrow up to 50% at BBR (0.5%) and the other 50%, easily, at BBR + 1.01-1.5 (1.51-2%). Why in that context is BBR + 3% even a problem as applied to a small number of mortgage customers who have been given this guarantee? Slapping £1000/year on average on everyone's mortgage payments would in any event only raise about a million in a year, but their top executives have in some cases been paid over £1 million in one year and each a couple of million in pensions, don't you think it's fairer to take any "shortfall" (if there even is a shortfall) out of that? Being as these are the same people who allowed this screw up to happen in the first place? (easily avoided by introducing a floor on new mortgage agreements).

I agree with you on the other hand that I do not think the government should bail Skipton out, but then again, I don't think it would. So your money is safe from being used for that, don't worry. It's a shame you are taking such an anti-consumer attitude, I would be standing up for you if someone reneged on a guarantee they'd made to you...