What is Barclays Bank Base Rate?

seeya23

http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?site=pfs&task=popup1group&value=15396

alphonet

simmotech wrote: »

I've just discovered this thread after Googling for BBBR due to a leaflet including with my last statement entitled "Barclays: Changes to your agreement with us" due to come into effect on 30 October 2009.

Looks like they are using compliance to the Payment Services Regulations 2009 as a way of also introducing some suspicious new terms and conditions in their Retail Custom Agreement

Its too large to copy but here are a couple of sample paragraphs:

"
5. Varying and ending the agreement
....<stuff omitted here>...
Changes for any other reason

We may change any of the terms of the agreement (including a Barclays managed rate, the amount by which a Barclays tracker rate differs from the reference interest rate, any other term relating to interest rates, and our charges) for any reason not listed above.
We will not change a Barclays Fixed rate or bonus rate (or the amount by which a Barclays tracker rate differs from the reference interest rate) during the period for which that rate or difference is agreed with you.
" (my emphasis added)

"6.2 Overdrafts and Personal Reserve
If you have a Personal Reserve and/or overdraft on an account and there have been no payments on that account for a period of 12 months, we will assume you do not want the Personal Reserve and/or overdraft and we will cancel it."

(I have a large Reserve which I've not actually needed but I took out the mortgage on the basis that I would have access to a secured loan if an emergency came up)

After seeing this thread, and noticing the change that all the Barclays web page now refer to "typically following the Bank of England Base Rate but it is not guaranteed to do so.", I have tried calling Barclays Customer Services and even ended up logging a complaint. It would seem that noone has seen this leaflet and have no knowledge of the changes coming in.

The way the leaflet is worded is that these changes come in on 30 October 2009 and you will have two months notice of changes and "You will be treated as accepting any change we make unless you tell us (before it is due to come into effect) that you want to terminate your agreement with us and not accept the change. We will not make any charge for termination if you terminate your agreement in this case"

Can they really make you either agree to their changes otherwise you are treated as requesting to terminate the agreement? Is it not possible to say "No thanks to your changes, I would prefer to keep the terms we agreed previously".

I just get the impression that Barclays have been putting things into place to be able to add a new rate between their BBBR and the BoeBR (ie leaving your difference from the BBBR unchanged and still "following the BoEBR") but leaving us shafted effective rate-wise.

So my questions are:
1) Has anyone else got this leaflet yet?
2) Is there a definitive date when the mortgage Offers/KFI stopped using the "..our Base Rate should be taken to be references to the Bank of England Base Rate? (I can't find my documentation at the moment to check)
3) If they can vary terms seemingly at will, would that clause be of any use anyway? They could could just terminate the mortgage themselves with two month notice.
4) Is the Retail Customer Agreement part of the mortgage contract, in addition to it, or just for Offset mortgages?

Cheers
Simon

Hi, I just got the leaflet (end October) and was horrified at the proposed changes of terms and the method by which they are introducing them. You should also look at the "Payment Allocation" clause change that allows them to allocate payments to the lower interest rated items first!

However, your key issue is that they say they "assume" you dont want the Reserve if you dont draw on it for 12mths However, if you specifically inform them that you wish to retain the Reserve facility then you may find that they are not be able to withdraw it (how can they 'assume' you dont want it if you say you definately do!). Did you try asking if you could retain the facility beyond the 12mths?

Can they do this....well they can make changes to terms and conditions, but they must be fair. My reading of the changes is that there are items that breach the Unfair Contract Terms Act, notable reference to "We may change any of the terms of the agreement ...for any reason not listed above". The OFT (after referral by the FSA) have already determined against Barclays as a breach of the UCT Act for similar wordings on their savings bonds, (I cant post links but search for "The Office of Fair Trading: Barclays Bank PLC" in Google)
The determination was that such clauses give "excessive discretion to unilaterally vary the contract".

Let me know how you get on. I will also raise a complaint, but as Barclays have not responded to my complaint on the redefinition of their BBBR since December last year (in breach of FSA rules on complaints) then you will probably get no joy and next approach would be the FSA. You will have to complain to Barclays first though. They say they take 7 weeks to reply to a complaint. What a company!

MarkyMarkD

I still don't know why you are getting het up. For Barclays mortgages, BBBR=BBR. That's all you need to know.

Lenders CANNOT restate the basis of your mortgage. What you have stated in your KFI is what matters. That is clear from what has happened with other lenders - e.g. Halifax and their base rate floor which wasn't in the KFI and hence cannot be enforced.

The PSR changes relating to tracker rates do not affect mortgages. They are simply saying that if you have a tracker savings account, they may amend the tracker margin - with 60 days' notice. No big deal about that - they could simply withdraw the product and change your deal that way with the same notice. The same does NOT apply to a mortgage because they are obliged to let you repay it over its contractual term, and cannot terminate on shorter notice unless you do something materially wrong.

alphonet

MarkyMarkD wrote: »

I still don't know why you are getting het up. For Barclays mortgages, BBBR=BBR. That's all you need to know.

Lenders CANNOT restate the basis of your mortgage. What you have stated in your KFI is what matters. That is clear from what has happened with other lenders - e.g. Halifax and their base rate floor which wasn't in the KFI and hence cannot be enforced.

The PSR changes relating to tracker rates do not affect mortgages. They are simply saying that if you have a tracker savings account, they may amend the tracker margin - with 60 days' notice. No big deal about that - they could simply withdraw the product and change your deal that way with the same notice. The same does NOT apply to a mortgage because they are obliged to let you repay it over its contractual term, and cannot terminate on shorter notice unless you do something materially wrong.

I agree that BBBR will be BOE Base Rate, but can only be confident of that now because the banking crisis has stabilised and margins are returning.

However, this thread started as Barclays set the scope to change the rules midstream, with the 'possibility' that armageddon was to come.

You may disagree that they could change the rules, but your KFIs were written differently to many others (for many, the link to BOE Base rate is left ambiguous). People therefore have genuine concerns. I would love you to explain why Barclays would change a definition to add "but it is not guaraanteed to do so" unless they have in their mind that there may be some circumstance where they think it fair to test the line. Working for a large financial company myself, we would not dream of changing a single word of our terms without full consideration of commercial and legal consequences. Many companies will test the boudaries of what is fair, when it comes to their own survival. Barclays are no exception.

I also think it is useful for consumers to know that Barclays reacted in this (rather dis-honorable) way. To use an analogy, you argued previously that they will not fire the gun, but I feel like they waived the gun in my face and I dont like that.

I dont like companies changing, in a material way, a 30 year agreement secured on my home, in which me and my family reside , saying, if you dont like it then you can repay the mortgage in two months!

Similarly if I complained about bad food in a restaurant, I would like the waiter or chef to listen to and respond to my concerns, not to simply ignore my complaint or to say, effectively, "if you dont like it then f##k off ".

As a consumer, it is useful to know how companies react in the crisis. This is in the same way as it is useful to know which banks passed on changes in base rates to their SVRs, or which ones are paying themselves large bonuses whilst charging unfair fees. Personally, I expect the highest standards of behaviour in a supplier.

In the case of my response above, a mortgage current account reserve is pre-authorised lending facility that came with my mortgage and that of the poster I responded to....yet Barclays are removing them after a year of not taking them up. That is a material change. Had my mortgage not had that facility I would not have taken it out. Why should I not complain, when they act in this way.

MarkyMarkD

The issue is that if Barclays have x,000 that say that for the purpose of your KFI (my KFI) BBBR=BBR, then they cannot have a "different" BBBR which is not equal to BBR.

The only thing they could possibly do is, once ALL the mortgages with the BBBR=BBR condition have expired, remove the link.

And that is a very, very long time away. My mortgage has over 23 years left to go with BBBR=BBR.

It is well established fact that lenders cannot operate more than one rate which is called the same thing. When Nationwide et al attempted to do so, they got seriously hammered by the regulators.

BBBR is part of a huge number of Barclays products, and it has effectively never differed from BBR.

I quite agree that removing a facility from your mortgage is a material change and that should not be possible. In this circumstance I would complain to Barclays to get on the record the fact that they cannot do this without your agreement, which you do not give.

simmotech

Have been battling with Barclays complaints team for 9 months now and got nowhere.

Despite showing them links where they themselves have specifically referred to BoE base rate (including their own website definition of BBBR on archive org back in 2007)
plus referring them to this article they are still maintaining that the mortgage is and always has been linked to BBBR and not BoE and therefore they can change BBBR away from BoE whenever they wish.

In fact, spoke to someone on their Mortgage helpline today who explicitly told me that they realised that there were some mistakes on their website a couple of years ago and that it has now been corrected. (The bit about "Interest on tracker rate mortgages is charged at a set margin above or below or equal to the Bank of England Base Rate.... should be taken to be references to the Bank of England Base Rate.")

Ironically, on 28th February 2010, they are changing their managed rate SVR to be a tracker based on BoE base rate! (BoE + 4.49%).
Their definition of managed rate is "a rate that we set and can vary at any time" so their managed rates are now trackers and their trackers are really managed rates.

If they are now going to use a 'base rate' for their SVR, why wouldn't they use BBBR which they do for everything else?

Could it be that they are planning to increase the BBBR this year?

Cheers
Simon

tiggerjj

Ive read the majority of this thread and now are completely confused!
I am taking out the Woolwich offset tracker at 2% above BBBR. Is the BBBR=BofE base rate or have now removed that link?

Is this mortgage now a bad idea? Im really confused!

Plan on taking a 90k mortgage on a 130k property and have 20k in savings which will increase over the coming years and i plan to overpay £500 a month already.

Any advice greatfully received!

Pincher

Why ask, just see:

http://www.personal.barclays.co.uk/BRC1/jsp/brccontrol?site=pfs&task=popup1group&value=15396

i.e. "We reserve the right to abuse your bottom if we feel like it."

MarkyMarkD

Barclays mortgage offers, at least when I took mine out, all refer to BBBR but then say in the "small print" that "wherever BBBR is quoted, it should be taken to mean BBR".

BBBR has never differed from BBR by any material amount for any material time. This whole thread is just an exercise in worrying about nothing.

And yes, I do have a Barclays lifetime tracker, and no I'm not worrying about it.

simmotech

MarkyMarkD

With regard to the "wherever BBBR is quoted, it should be taken to mean BBR":
I agree that that should sort it all out but Barclays have have told me it was a mistake and it has been corrected now.
Also, I believe you have it in writing? Is that correct? If so that would help your case but mine was a rate switch with no supporting documentation. I only have what was archived from the website at the time and unsupported evidence when I telephone to clarify.
Also, in the event that Barclays do disassocate BBBR from BoE, even if you eventually win the argument, do you really want the hassle of reclaiming any difference that their systems will automatically charge initially?

"Past performance is no guide to the future". These are funny times and the interest rate is low enough for banks to be worried about losing money if they stay like that for long enough.
See the story about the Skiption Building Society increasing their SVR using an "exceptional circumstance clause" a few days ago. Barclays don't even need such a clause, they have (or believe they have) everything in place already.

Cheers
Simon