KEY FACT ILLUSTRATIONS CON or What?

pineman

I have for the past 18 months or so been having a dispute with my mortgage lender. I've accussed them of mis-leading and mis-selling a mortgage product to me. The complaint is now with the Finacial Ombudsman Service ( It's been with them since July 2009 and has still not got to the Ombudsman, only to the adjudicator who clearly feels the lender has not done anything wrong)
The issue is that the product on the mortgage offer differed to the product illustrated in the Key Facts Document. The difference was the wording used, not the actual final figures. Which as a non financial expert or solicitor I did not compare wording, only the rate of interest and the amount payable. Most people would compare the Interest rate and the Monthly payments due only.
For example, if on the KFI it states the rate of interest being 2% above the bank of England base rate of 0.5% the rate charged would be 2.5%
How ever if on the offer document the lender says that the rate of interest would 2.5% Most people would accept that as being the same. Not so. It's a different product as the lender has not mentioned the Bank of England base rate in the offer which means they can say that the rate they offered is not linked to the Bank of England. Which allows them to increase the rate at will as soon as you sign the offer.
According to the lender the KFI is not a legal document and therefore it's not important.
According to the FOS the fact that no KFI has been provided for the Mortgage offered is acceptable and that the details on it are not required to be factual or accurate as it is out of date by the time we receive it.
Do people know that more often then not the KFI is only valid on the day of production so when posted to you it will be out of date and any information in it is not valid.? So when the FSA say that this documenet is required to enable us to make and informed decission about a product such as a mortgage, it is in fact a waste of time as the FOS and the lenders know that what ever they put in the KFI does not need to be current, accurate or true.
I just think that there is no point giving people infomation that is legally misleading. The public should be aware that they do not need to campare the offer to the KFI as the KFI is not relevant. They must not sign the offer until they fully understand the wording, phrasing and figures within it. Even if you use a broker the KFI would be printed out by him and quite often given to you whilst you are in his/ her office. But the offer will come from the lender days or weeks later... The KFI is out of date and not valid........

Meeper

You signed a document accepting the terms of the mortgage offer. If the terms of the offer were not acceptable to you and did not mirror the KFI as expected, you shouldn't have signed it. Having signed the terms you cannot, in good faith, declare that you have been unfairly treated because you were aware of this at the beginning.

It will depend on EXACTLY what the wording is on your mortgage offer document, not only in section 4 but also in any special conditions that may be in the notes supplementary to the mortgage. Who is the mortgage lender in question?

BadgerFace_2

Have they increased you rate beyond what it would have been?
Is this in relation to an SVR?
Does the KFI say something like 'then reverts to our SVR, currently 2% above the BOE base rate'?

kingstreet

Tell us more about the rates and where they are quoted and what loss you've suffered as a result of this "error".

pineman

Meeper wrote: »

You signed a document accepting the terms of the mortgage offer. If the terms of the offer were not acceptable to you and did not mirror the KFI as expected, you shouldn't have signed it. Having signed the terms you cannot, in good faith, declare that you have been unfairly treated because you were aware of this at the beginning.

It will depend on EXACTLY what the wording is on your mortgage offer document, not only in section 4 but also in any special conditions that may be in the notes supplementary to the mortgage. Who is the mortgage lender in question?

The Lender is MAS No5 they are now part of the Co-Op.
The actual wording on the KFI is " Standard Variable rate is 1.99% above the Bank of England base rate 6.99%" at the time the base rate was 5%. The offer said " Standard Variable Rate 6.99%" They did phone and offered a discount of .75% for 12 months. Which reduced the rate to 6.24% which was acceptable at the time.
When the base rate started to go down they passed these reduction on to me no questions. Then they started to put the rate up, when I called them to find out why the rate was going up when the base rate was not they said that the SVR has nothing to do with the base rate. I quoted the KFI to which they replied that the KFI was not a legal document and it was out of date after the day it was produced. It was posted to me therefore it was out of date when I got it. I have since established that the product illustrated has never been available to anyone. So why illustrate it? Why mention the Bank of England rate if you have nothing to do with it?
They never pointed out that the offer differd from the illustration and as a layman I looked at the SVR rate assuming that the method used to obtain it was the same. They should have clearly pointed out the differences and provided me with a new KFI reflecting the product offered How else can you make an informed decission. Which according to FSA rules that is the point of the KFI.

Meeper

Did they provide the KFI, or was it done via an adviser?

Conrad

I'd say you do have a case.

Check out the 6 principles (often called the 6 'outcomes') laid down by the FSA known as 'Treating Customers Fairly'.

The problem with Ombudsman staff is they do not always apply these principles as I suspect they just forget them, dont know enough about them, but these 6 principles MUST be obeyed by lenders.

I agree that you as LAY PERSON would have no cause to suspect a reputable lender with the 6 TCF outcomes at the core of thier culture, would willy nilly change important terms buried in a fairly compex document.

You should have had a separate clear letter in good time AND BEFORE YOU HAD MENTALY AND EMMOTIONALY COMMITED to the process of the application.

This is akin to agreeing the price of a car and then in the last moment when you go to collect it, the garage inserting small text on page 3 saying an extra levy is now due, once you'd emmotionaly committed time and energy to the deal and had not expected a last moment tangent.

Fuk, the Ombudsman, go straight to the FSA - Lord Turner - is the head. Send it 'Special Delivery'.

Meeper

Depending on when the initial contract was taken, TCF and the outcomes may not have been in force, so that might not be a viable route of complaint.

pineman

BadgerFace wrote: »

Have they increased you rate beyond what it would have been?
Is this in relation to an SVR?
Does the KFI say something like 'then reverts to our SVR, currently 2% above the BOE base rate'?

Yes.. currently charging 4.5% should be 2.49%

pineman

No The KFI does not state that the rate will go up.

pineman

Meeper wrote: »

Did they provide the KFI, or was it done via an adviser?

they supplied the KFI...No adviser used as they took over the mortgage from Gmac. which was on a fix rate. They sent the KFI when the fix period ended.