MSE News: Yorkshire and Clydesdale Bank 'write off mortgage underpayments'

Skyerocket_2

Interesting comments and a degree of sour grapes from some on this forum.

The Clydesdale/Yorkshire bank "great mortgage muckup" was wholly the banks mistake.

To their credit the bank owned up to the error but then attempted to (and in most cases has successfully) ask the customer to pay for the error.

The ombudsman is ruling simply that the customer had no reasonable way of knowing that their payments were wrong, and thus the bank should return the mortgages to the level they should have been at if the error had not occurred.

It must be noted that the Bank is following the ombudsmans advice only in contested cases, not in general, and as such is forcing the majority to pay for the shortfall by extending mortgage terms or by taking additional funds or lump sums. All of which favour the bank.

The Clydesdale Bank has acted appallingly in these cases, has shown little care or appreciation of loyal customers and should be ashamed of its actions.

Flame away oh wise ones...

worldtraveller

Skyerocket wrote: »

Flame away oh wise ones...

Not at all!

http://forums.moneysavingexpert.com/showpost.php?p=34953141&postcount=97

dunstonh

What is interesting is that this is only cropping up now.

The FOS published this in Aug/Sept issue:
http://www.financial-ombudsman.org.uk/publications/ombudsman-news/88/88-mortgage-underfunding.htm

So, if the process was set 10 years ago, then why has this taken so long to resolve?

jamesd

Given that they wrote that they deal with a large number of disputes in this area, that implies that this just happens to be an uncommonly prominent case, here and in general, not anything particularly unusual.

What is interesting is that it appears from comments in the discussion that the lender in this case may be systematically making offers to customers that differ from the resolution a reasonable person would expect to see delivered by the FOS. The FOS has been becoming more activist about companies that systematically ignore its past rulings and create unnecessary work for the FOS, while disadvantaging consumers who don't go to the FOS. It'll be interesting to see whether this is a case where the FOS will pass on a complaint and request for review of the lender's conduct to the FSA. Such a review might result in an instruction to review the situation of all customers, not just those who went to the FOS.

Skyerocket wrote: »

The ombudsman is ruling simply that the customer had no reasonable way of knowing that their payments were wrong, and thus the bank should return the mortgages to the level they should have been at if the error had not occurred.

The FOS is not ruling that customers should be put into the position they would have been if the error had not happened, though. It's ruling that they should be placed in an advantageous position, having the mortgage set to where it would be if the payments had been higher but not having to actually make those higher payments. Perhaps three quarters of the money involved is the payments that will be treated as if they had been made, even though they weren't actually made.

The difference is substantial because the standard practice for most forms of financial services error redress payments, like endowment mis-selling or wrong mortgage sales, is to be put into the financial position you would have been in if the problem hadn't happened, not to also pretend that you've been making payments you hadn't actually made.

This doesn't mean that in general I disagree with the approach taken in this case. I'm just observing that it's just way more favourable to consumers than expected in normal redress payment situations. The honest belief that the payments were correct and the general trustworthiness and responsibility level expected of mortgage lenders is why it's so unusually generous to the consumers.

opinions4u

jamesd wrote: »

Given that they wrote that they deal with a large number of disputes in this area, that implies that this just happens to be an uncommonly prominent case, here and in general, not anything particularly unusual.

What is interesting is that it appears from comments in the discussion that the lender in this case may be systematically making offers to customers that differ from the resolution a reasonable person would expect to see delivered by the FOS. The FOS has been becoming more activist about companies that systematically ignore its past rulings and create unnecessary work for the FOS, while disadvantaging consumers who don't go to the FOS. It'll be interesting to see whether this is a case where the FOS will pass on a complaint and request for review of the lender's conduct to the FSA. Such a review might result in an instruction to review the situation of all customers, not just those who went to the FOS.

It's is quite beyond me why the FSA hasn't already acted without being prompted to by the FOS.

It's a reportable event. It's been reported (and if it hasn't they know about it anyway).

What is the point of this sort of regulator?

jamesd

It's still early days, with the FOS apparently still handling a lot of cases about this incident. For all we know the FSA may already be investigating or may be waiting for more data from the FOS before acting.