MSE News: Yorkshire and Clydesdale Bank 'write off mortgage underpayments' 12 November 2010 at 4:36PM edited 12 November 2010 at 4:39PM in Mortgages & endowments 16 replies 2.7K views

Former_MSE_Guy

This is the discussion thread for the following MSE News Story:

"This gives hope to 18,000 families hit by the bank's computer gaffe who've been asked for up to £3,500 a year more ..."

Read the full story:
Yorkshire and Clydesdale Bank 'write off mortgage underpayments'

michaels

Martin are you really advocating that consumers should get out of contracts they freely entered in to due to a processing mistake?

I can certainly see the case that those affected should be 'no worse off' which means sensible time to pay, compensation for any extra costs incurred, compensation for time and worry but I can't see why the debt should not be enforced as all customers of these banks will then pay as the banks seeks to recover the loss from its whole client base which hardly seems fair.

dunstonh

Talk about going from one extreme to the other and getting a free pass.

FATBALLZ

I assume MSE is going to start a reclaiming campaign as usual - "Reclaim your mortgage debt, don't let the banks steal it".

jamesd

That's a bit unfair because in this case the mortgage borrowers may well have legitimately believed that they were paying the correct amounts and it's a general part of law that if you do end up in that situation and have honestly spent the money that you believed was yours, you may not have to repay it. This won't apply to the whole mortgage balance, though.

getmore4less

jamesd wrote: »

That's a bit unfair because in this case the mortgage borrowers may well have legitimately believed that they were paying the correct amounts and it's a general part of law that if you do end up in that situation and have honestly spent the money that you believed was yours, you may not have to repay it. This won't apply to the whole mortgage balance, though.

In the cases posted here that I looked at you would have to have been incompetant not to notice, the payment was significanty LESS than required.

Greed-Is-Good

michaels wrote: »

Martin are you really advocating that consumers should get out of contracts they freely entered in to due to a processing mistake?

I can certainly see the case that those affected should be 'no worse off' which means sensible time to pay, compensation for any extra costs incurred, compensation for time and worry but I can't see why the debt should not be enforced as all customers of these banks will then pay as the banks seeks to recover the loss from its whole client base which hardly seems fair.

Who gives a toss??

When it comes to people's personal money morality means absolutely nothing and is worthless,
its only what the LAW states that actually matters!

opinions4u

jamesd wrote: »

That's a bit unfair because in this case the mortgage borrowers may well have legitimately believed that they were paying the correct amounts and it's a general part of law that if you do end up in that situation and have honestly spent the money that you believed was yours, you may not have to repay it. This won't apply to the whole mortgage balance, though.

Any specific law?

First of all, if I was in this position I would certainly have pursued the FOS route which seems to be taking the line of "write the money off". I look after number one and would encourage all customers of financial organisations to do the same.

Secondly, I have little to no sympathy with the lender. It really isn't asking a lot to charge your customers the correct mortgage payment. This is one hell of an error and the way they've handled it is at best clumsy and at worst a disgrace. Charging customers interest for your mess? Utterly reprehensible.

Thirdy, where is the FSA on this one? I find it a little repulsive that the regulator appears to have stood aside for so long and allowed customers to be pushed around by the lender or forced to seek a ruling from the FOS on an individual basis. When this was picked up as a "reportable material event", which it surely must have been, were the bigwigs of this firm not summoned to a meeting to thrash out a solution that was considered fair and reasonable to customers? It's another example of pathetic regulation from this shocker of an organisation.

Finally, what do I think is fair? Well I really do think that the customers owe the money that has been underpaid. But at the same time they have been inconvenienced as well.

So a solution that does the following would seem to be appropriate:

1) The funds must be repaid within a reasonable time period linked to a customer's ability to pay.
2) No interest should be payable in any circumstances on the underpayment.
3) An amount of compensation, perhaps in the region of £250 or maybe a percentage of the amount underpaid should be due.

That said, if I could get the whole amount written off, I wouldn't be thinking about what's fair and appropriate. I'd be getting exactly what I could out of the situation.

Gorgeous_George

It is the bank's mistake and should be paid for from their profits and bonuses. Of course, it won't be. Just like when the regulators fine utility companies for letting their customers down it is the customers that pay the fine - a bit of a double whammy.

Have people been sacked for incompetence?

GG

magyar

I'm sorry but I have to agree with michaels here. As far as I can see this was an honest mistake by the bank, a simple computer error. I agree completely that people should not be worse off as a result of this, but should equally not be better off as a result.

If the tables had been reversed and people had been overcharged for a while, do you think customers would not expect their money back?

jamesd

getmore4less wrote: »

In the cases posted here that I looked at you would have to have been incompetant not to notice, the payment was significanty LESS than required.

Sometimes it might have been obvious, sometimes not. Consider my own case unrelated to this where on five occasions I received mortgage offer letters that were wrong, several with an interest rate half a percent too low, during which time advertised offers were also changing to lower levels. I can readily understand people accepting that a trustworthy mortgage company was getting the offers and payments right and not questioning them. The mortgage company has the professionals, after all, and is expected to get things right.

Of course, I did notice and persevered until I had a correct offer. But whether I had to or could rely on the offer letters is a different matter.

opinions4u wrote: »

Any specific law?

Yes, standard law where customers have changed their position as a result of the errors. See Ombudsman News 33 for how the FOS handles it. As the FOS wrote:

"as long as the firm’s mistake has caused the change of position, it does not matter if the firm did not expressly represent to the customer that the money belonged to the customer"

Yet in these cases there was also a representation from the mortgage lender that the money was the customer's, so making the position of the customer even stronger.

But this does require a belief that the money was really that of the customer and I suppose that there may be some cases where the customer noticed and did nothing.

Given what you've written about your background I'm sure you're also aware of court cases where similar rulings have been made, so I'll refrain from that bit of research to refresh my memory of some cases for the moment. Perhaps someone else would care to do it?

opinions4u wrote: »

Finally, what do I think is fair? Well I really do think that the customers owe the money that has been underpaid. But at the same time they have been inconvenienced as well.

For some customers I agree that repayment over a long time would be an appropriate resolution, if they were easily able to afford it. No less a time than the time over which the error happened, preferably starting at at least twice as long (because paying more hurts much more than paying less). And certainly no interest charged during this time.