Can my lender do this? "Supplementary Terms"

markb1_2

I have just received a letter from my lender (SPML) regarding a "review and clarification" of its lending terms. There is one particularly concerning element in these changes which seems to imply that my tracker mortgage with is currently tracking LIBOR will now track their self-defined base rate, which I guess could now be whatever they want to charge. The exact wording is as follows:

Start quote...

Where the wording for the Offer of a fixed loan previously read:

"A fixed rate of [ ]% until …….. followed by a variable rate currently [ ]% which is [ ]% above LIBOR of the remaining term of the mortgage…"

It should now read as follows:

"A fixed rate of [ ]% until …….. followed by a variable rate currently [ ]% which is [ ]% above Base Rate for the remaining term of the mortgage…"

"Base Rate" is defined in the Terms at Section A, clause 1(d) as "such rate of interest as the Company [SPML] will in its discretion from time to time select, subject however to clause 7 of the section C [Changing the Interest Rate]".

Please note that Base Rate in this context is not the Bank Of England Base Rate.

...End quote.

My question is can they just change the terms of the agreement like this, or are they trying to pull a fast one? There doesn't seem to be much point in having a contract if they can.

Cheers - Markb1

holly_hobby

Is there anywhere in your existing contract (that you agreed to enter into on the displayed terms), which includes any reference to the fact, that their choice of what they use and define as SVR, is discretionary and may be amended at their preference ?

If not, to amend the repayment terms (i.e in this case the basis of interest charges) to a contractual arrangment already in existance, I would suggest clearly requires the agreement of both parties (as you entered into the contract on the basis that post product the SVR was LIBOR linked, which they are now seeking to change to another source/linked rate).

And I believe an action that could certainly be tested under contractual law (Unfair Relationship Test springs to mind, although this is in respect of CCA regulated borrowing). As this is clearly a fundamental change to the core element of the contractual arrangement you originally entered into.

Whilst lenders may use the "exceptional circumstance" as a cover all excuse, whether this has actually been tested in court is another thing, but it does depend upon what the original mortgage contractual T&Cs state.

However, I am not a qualfiied solicitor (don't think O level law counts !), and the above are just my own thoughts made without reading the original mge contract. So a free 1/2 hr with a contract law solicitor or with your local Sol at CAB, wouldn't go a miss - but I would definately bottom this out just for piece of mind.

If it can't be challenged (which may be the case), then the choice is to accept or take your business elsewhere .. !

Hope this helps .. good luck

Holly

markb1_2

Hi Holly,

Thanks for that. Just trying to find the original contract to go through it. It just seems a bit odd, it effectively means the "safeguard" aspect of the tracker of the mortgage, and one of the primary features for choosing the product ultimately amounts to nothing! One could argue has it been mis-sold?

Cheers - Markb1

Thrugelmir

holly_hobby wrote: »

Whilst lenders may use the "exceptional circumstance" as a cover all excuse, whether this has actually been tested in court is another thing, but it does depend upon what the original mortgage contractual T&Cs state.

Due to the exceptional financial circumstances that currently exist. Neither any solicitor nor the FSA has challenged any lender. Hardly surprising really.

Providing the interest rate charged is fair in terms of market rate. ( Average SVR was 4.8% across all lenders prior the Halifax and BOI increases). Then will hard to justify as unfair. Commerciality will over rule consumers protests.

holly_hobby

Not quite mis-sold, but there are rules under tort/contractual law regarding modifying agreements.

It all depends upon what the original agreement stated, and how transparent (if at all) of any advice of their right to future amendment of which format of SVR they may elect to use, and then what merit any legal challenge would bring, if any.

First job is to dig out the original t&cs, or ask for a copy of them from the lender (if they start being a bit arsey you could do a SAR request, which will give you everything on your account both documentary and auditory, for a standard fee of £10. They have 40 days to reply once they get your request).

Hope this helps

Holly