Standard Life to Barclays - breaking contract?

NSN1968

Hi,

I am on a 5.35% fixed rate with Standard Life. I have just received a letter from Barclays stating that the sale of Standard Life to Barclays has resulted in my mortgage now being with Woolwich. The fixed rate stays the same but they are removing some of the flexible benefits such as the cash reserve, prepayment and payment holiday facilities.

I am considering moving to a lower fixed rate deal with another lender. Barclays will charge me £3.5k for leaving the fixed rate early but I have calculated that I will save at least £6k by moving on to a new deal giving a net £2.5k gain over the four years I have left on the fixed rate period.

So moving seems to be a sensible decision but I can't help thinking that by removing some of the benefits of the deal I signed up for, they are breaking the contract and I wonder if I would be able to argue this point to get out of paying the early exit fee.

Does anyone have any experience in this area?
What is the best way to get the ball rolling on this? Contact Barclays or go to the FSA or ombudsman?

Any help or comments are appreciated.

Neil.

opinions4u

The key to this is whether these features are contractual or not.

What do the mortgage T&C booklets say? What does the advertising material that persuaded you to buy the mortgage say? What it the lender's current view on this? What have previous statements, mailings and communications told you?

If not contractual, you're heading down a blind alley. If they are contractual, you should win. It's then a case of how long will it take to achieve victory.

Your complaint needs to be addressed to the lender first.

If, after 8 weeks, they have not responded (or within 8 weeks they have rejected your complaint with a letter of deadlock) you can take it to the Ombudsman (FOS). That will not be a quick process and could take 6-24 months to resolve.

At any time you can take them to court. But there is the risk of having a costs award against you.

It's nothing to do with the FSA. They will simply send any complaint to the lender.

NSN1968

Thanks
Do you think that my chances of success are affected if I switch lenders and pay the exit fee then try to reclaim it retrospectively rather than staying with my current deal until the matter is resolved?

opinions4u

NSN1968 wrote: »

Thanks
Do you think that my chances of success are affected if I switch lenders and pay the exit fee then try to reclaim it retrospectively rather than staying with my current deal until the matter is resolved?

It shouldn't affect any decision the FOS make.

mackll

Hi,
I'm also caught up in this forced move of my Standard Life Flexible Mortgage to a Barclays Woolich (so called) Flexible Mortgage, and I'm not happy about it, as most of the flexible features are being removed. They are affectively forcing us to remortgage.

Also, I've just got off the phone with the Ombudsman. They have had a number of complaints about this and are likely to be opening an investigation into it, but say we must complain to Barclays first.

NSN1968

Hi Mackll
Glad to hear there may be an investigation.
I tool opinions4U's advice above and have written a letter to Standard Life Mortgages as we're still with them until April.
Basically said to them that that the mortgage offer (which I still have) states the flexible options as part of the mortgage and that without them it no longer fits my requirements.
I'm 6 years into a 10 year fixed rate so have asked for them to either honour the flexible benefits (which they won't I'm sure) or allow me to move without the early repayment fee.
I'll post updates as the complaint progresses.
Neil

Darkstar

I am also in a similar situation to NSN1968 and have register a formal complaint with Barclays which they have promised to respond in writting within 5 days, i.e. by 23rd March.

I have also spoken to the Ombudsman and have been advised to phone back once I have Barclays letter.

My guess is they will climb down on ERC for a limited period if you formally challange them as the Ombudsman is more than lickly to up hold any complaint and fine them.

dunstonh

I am also in a similar situation to NSN1968 and have register a formal complaint with Barclays which they have promised to respond in writting within 5 days, i.e. by 23rd March.

It is unlikely that you have made a formal complaint then. Or rather that they have recognised it as a formal complaint. The complaints process gives them 8 weeks to resolve your complaint and they are required to tell you this. So, if they say 5 days, then it doesnt sound like a formal complaint response.

My guess is they will climb down on ERC for a limited period if you formally challange them as the Ombudsman is more than lickly to up hold any complaint and fine them.

There are very few examples of the FOS overriding the ERC. They did have a stint some years back where the lenders failed to put the ERC terms in the contract. However, the lenders resolved that pretty quickly and you would expect all of the contracts without the ERC to be out of the system now.

Also, I've just got off the phone with the Ombudsman. They have had a number of complaints about this and are likely to be opening an investigation into it, but say we must complain to Barclays first.

Be wary of the FOS telephone staff. They always tell you what you want to hear. We have done mystery shops on the FOS before using different scenarios and cases where there was no wrong doing and the answers were nearly all the same. Usually along the lines of "this is something we would like to take a look at". The FOS does not open investigations into firms. It has no remit to. It can pass information on to the FSA if it feels there are systematic problems.

Not making any judgement on the right or wrongs in this case. Just adding a bit of caution to not get carried away with the near scripted responses you get from the FOS telephone staff.

Darkstar

dunstonh wrote: »

It is unlikely that you have made a formal complaint then. Or rather that they have recognised it as a formal complaint. The complaints process gives them 9 weeks to resolve your complaint and they are required to tell you this. So, if they say 5 days, then it doesnt sound like a formal complaint response.

Now that you mention it I think her wording was I would receive a letter acknowledging that I have made a formal complaint within 5 working days specifing the process and timescales for its resolution.

The ERCs are clearly defined in the contract as are the terms they are revoking.

I very nearly remortgaged earlier in the year but the cash reserve was the feature that made me stay. With it effectively revoked I will probabaly remortgaging and fight the ERCs if the apply them.

Thrugelmir

Darkstar wrote: »

The ERCs are clearly defined in the contract as are the terms they are revoking.

You also signed a contract clause to the effect that your mortgage could be sold on to a 3rd party at any time. In doing so the new mortgage lender is under no obligation to maintain the features of the product nor in fact the interest rate.

The FSA will only be interested in the situation if consumers are treated unfairly. By unfairly the terms offered would have to be out of line with average market rates at the time.

DVardysShadow

Thrugelmir wrote: »

You also signed a contract clause to the effect that your mortgage could be sold on to a 3rd party at any time. In doing so the new mortgage lender is under no obligation to maintain the features of the product nor in fact the interest rate.

Assignment itself is not sufficient to invalidate contract terms even if these are those which benefit the borrower. If the original lender was bound to provide a benefit, then so is the lender who takes the contract under assignment.