ERC charged when deal ended & remained with current provider on new deal

lillaneyb

Hello,

interested to know people's thoughts on my current situation.

My previous mortgage deal ended last February, but prior to this was contacted by the mortgage provider to arrange a new deal. During discussions it was agreed that the ERC was not chargeable at the time we started the new deal as our current one was ending, it was also stated in the original offer that the ERC was chargeable to a certain date.

However, a year into the new deal I have received my annual statement which shows an ERC has been added to the account in January 2011, before the new deal started.

After receiving this I checked the new deal offer, which also stated that the ERC was to be added. At the time I believed this was only added once the mortgage was paid in full, not because I had changed deal.

During discussions with the provider on the telephone I made it clear that I wanted to avoid the ERC and I was reassured that this would not happen.

I am currently waiting for a call back from the provider on claiming the charge back.

dunstonh

You sound like you have all the bases covered and you just need to wait for them to come back to you.

How close to the expiry date did they change the deal? My guess (and its only that as we dont have the docs) is that someone did it too early.

lillaneyb

The first time I called, I was informed by them that I was looking to change too early and that it should be 2/3 weeks before. So I called again closer to the end date.

So our deal was ending on 13th Feb 2011, the product fee (which we were expecting) was added on 24th Jan along with the ERC.

However, the mortgage payments didn't change until the end of Feb, which implies to me that the new deal didn't kick in until the original deal ended.

lillaneyb

I guess what I'm wondering is whether this ERC will be removed from my account? What would your opinion be?

liubeliu

The key point is when did you and the lender agree that the product switch will happen and the date that it did happen. If it was before the end of your last deal then ERC is payable as stated in the offer you mention on your OP.

As the ERC was added on the 24th Jan it looks like the product switch was actioned prior to the end of your last deal. Unless you can prove that you agreed for the switch to occur after the 14th Feb, you face an up hill struggle.

liubeliu

As the switch possible happened on the 24th Jan it was probably too late to amend the DD for Jan and hence why payments only change from end of Feb.

lillaneyb

so I've spoken to the mortgage provider, at last. Fortunately it was someone I had spoken to when I was changing the deal too, which helped.

They also couldn't understand why the ERC had been charged, as the new deal was within the time allowance prior to the existing deal ending.

The query has now been passed to another department to be investigated and I should get a response in a few days.

Fingers crossed!

kingstreet

I'll be very surprised if you don't get the fee refunded. I'd expect the FOS to be on-side if you did need to escalate to them.

liubeliu

What date did you agree for the product switch? This is the key question.

As ERC was charged on the 24th Jan that would be the date that the Product Switch happened. If this was not the date you agreed with the lender do you proof on the date that was agreed.

In your opening post you state that the Offer for the new deal also stated that the ERC was to be added, therefore the lender has assumed that the switch would happen asap and not from the 14th Feb.

lillaneyb

The start date was 1st Feb

Spoken to a 2nd person, they are also unsure why this has been added and believe a mistake has been made when entering into their system

They have a 90 day period prior to the deal ending for existing customers to change to a new deal, which I was well within

At the moment there is no clear explanation, which two of the advisors were unable to understand

kingstreet

If the lender contacted you to suggest a new deal for you, it was the responsibility of the lender to ensure any necessary penalty end dates were observed.

As I say, I don't expect you to have any difficulty in getting the fee refunded. TBH it doesn't matter why it happened as long as the lender corrects the mistake and refunds the fee and any interest which may have been charged following its addition to your account.

If any difficulty, I'd suggest mentioning TCF outcomes 5 & 6 and the probability you'll escalate the issue to FoS as you'd waited until the end of your deal and would not have taken action when you did without unsolicited call from lender.

http://www.fsa.gov.uk/doing/regulated/tcf

Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.

Outcome 6: Consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint.