Santander are now refunding interest payments on Cahoot flexible loan's

Cell

http://www.fsa.gov.uk/pages/Doing/Regulated/uct/terms/index.shtml

Examples of unfair terms

Examples of terms that may be regarded as unfair under the Regulations:

• Terms that give the firm the absolute right to decide if its products or services have met the requirements under the contract or to interpret any term of the contract as it sees fit.

Cell

And finally, from the Cheshire Mortgage Corporation link:

http://www.fsa.gov.uk/static/pubs/other/cmc-undertaking.pdf

For the purposes of this Notice of Undertaking we have referred collectively to the 2004 and 2006 mortgage interest rate variation terms (outlined above) as the ‘original terms’.

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Application of the Regulations

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Regulation 5 and Schedule 2 of the Regulations

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Under the Regulations a term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer. When considering whether a term is unfair under the Regulations we also consider the non-exhaustive indicative list of terms which may be regarded as unfair, set out in Schedule 2 to the Regulations.
Paragraph 1(j) of Schedule 2 to the Regulations provides that terms with the object or effect of enabling [FONT=Times New Roman,Times New Roman][FONT=Times New Roman,Times New Roman]‘the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract...[/FONT][/FONT]’ may be regarded as unfair. In our view paragraph 1(j) supports our view that the original terms may be regarded as unfair under the Regulations.
In our view, the original terms cause a significant imbalance because they give the firm an unrestricted power to vary interest rates without the firm specifying valid reasons for making such variations in the contract. We consider that these terms, as drafted, had the potential to cause consumer detriment, because they could result in monthly mortgage payments being increased in an unpredictable and non transparent way.

The requirement of ‘good faith,’ according to case law, means that the supplier should deal openly and fairly with the consumer. In our view, if there is a lack of clarity as to when and how the original terms might be applied, the firm is not dealing openly with the consumer. Nor, in our view, is the firm dealing fairly with the consumer if it has an unfettered discretion to vary the interest rate applicable to the mortgage for any reason and at any time it chooses.

We also considered the fairness of the original terms in light of the first sub-paragraph of paragraph 2(b) of the Regulations which gives an indication as to when interest rate variation terms without notice are less likely to be objectionable. However, since there is no contractual obligation on the firm to give notice of any change at the earliest opportunity and likewise the mortgagor is not free to dissolve the contract immediately (i.e. not without the consumer incurring costs), in our view, the firm’s power to vary the interest rate is likely to be unfair under the Regulations and if so, not binding on the consumer.

Cell

I ought to point out that although I've quoted the FSA link it appears that the correct line of attack is via OFT:

The Office of Fair Trading (“OFT”) handles referrals about contracts relating to:

- credit cards;
- personal loans;
- hire purchase;
- other credit-related products.

MCSAVE

I received my letter from the FOS today, stating that they have just written to Santander for the details of the complaint and that they would be in touch within 12 weeks to discuss the case and introduce themselves. I first wrote to them in April so they've obviously got a back log. Anybody else heard from them?

kelly_dp

I received my letter from the FOS yesterday also (I originally wrote to the in April) so looks like we're running on the same time frame with the FOS. 12 weeks until i'll get an answer so into September!!

happy_bunny_2

Squirrel29 wrote: »

Just received the standard knock back letter and copy of terms and conditions, can I complain to FSO without statements as haven't done an SAR yet?

You don't need statements to complain to FOS.
Just fill out form on their website and include a copy of your complaint letter and the final response from Santander. Also include a copy of anything else they/you sent that you think may help the FOS.

Logman63

Hi everyone!
I received a letter from FOS on Tuesday, saying that the bank hadn't responded to their enquiry within the statutary 8 weeks. They've now written to them again and asked for them to respond within 14 days. If they don't, I think (hope!) that FOS will assume that the bank do not wish to contest my complaint and thus they'll uphold it.
Bizarre behaviour by a major financial institution...eh?
Oh, well...roll on 2 weeks time, I can wait a bit longer!
I'll keep you posted!

MHO_2

When did you initially send your complaint to FOS? I sent mine on the 16th April, so guess i've got a much longer wait ahead.

timlyon

I'm in a similar situation. I have paid off the loan. Could i get a copy of the letter you sent?

Many thanks

pheonixrising21

Thanks Cell, I've just highlighted those points to Santander.

At the same time I was sending that, they emailed me to say that

"During the period from 2006 and 2008 a number of interest rate rises were applied to your account. Some of these reflected underlying changes in the Bank of England Base Rate, and therefore fell within clause 13.2(b)."

I checked this and between 2006 anfd 2008, the BoE base rate rose from 4.5% to 5.75%, yet me interest rate went from 6.7% to 16.61%. Not a proportional rise is it? Significantly, they neglected to mention that in 2009 the BoE base rate fell to 0.5% and has stayed there ever since. And what happened to my interest rate.?Yes, it fell significantly to ..... 16.61%. You can't have it both ways Santander! If you raise rates based on BoE base rate, then you reduce rates based on BoE base rates too!

Based on changesin BoE base rates,my interest rate should be no more than 8.5% in 2008 and should now be around 1.5% (based on variations proportional to the BoE changes), but its not, its 16.61%.

I emailed them back informing them of this, so will await that response. They seem to be digging their own hole at the moment...