Equity Release – Bank deliberately obstructive?

nfr

I’d be interested in any advice on my parents equity release situation.  My focus here is not on whether it was mis sold or not, although personally I believe there is strong evidence of that but so difficult to prove – both had very good work and state pension income and as life long members of the bank really should have had better advice.

Rather my question relates to whether my mother (dad has sadly passed away) could have a case against the bank in question for being deliberately obstructive in assisting them deal with the equity release when they realised the impact.  If so who would it be best to approach to assist tackling the problem?

I cannot chart the complete history here as there is so much information, but to summarise: -

 

In 2007 parents approached their high-street bank to borrow a sum of money, to pay credit card debts and some other house improvement work.  A life time mortgage was the suggested option – nothing else was considered.  I wont mention figures but the bank ‘encouraged’ them to borrow 35% more than they originally wanted.

As early as 2009 my mother was concerned and the escalating figures and spoke to the bank who stated not to worry as house price rises would likely balance things out.

In 2015 with the debt rising significantly they took the case to the Financial ombudsmen, but it was rejected (from what I know now I’m not convinced it was handled well)

After numerous letters in 2017 the bank agreed in writing to switch mortgages. My parents attended an hour long interview, and were told that the mortgage would be approved.  After waiting 6 or 7 weeks and hearing nothing they followed this up with the bank.  Two days later, they received a letter informing that a switch was not possible as there was no longer anyone employed within  the bank who was suitably qualified to discuss an equity release matter!.  Given the Bank’s failure to deliver what had been offered in writing, at no point did the bank offer any alternative or seek to resolve the matter.  

Since 2017, my mother who is in her 80’s has written numerous letters to the bank for advice, whilst contending with my father’s terminal illness. Responses where they have occurred (lots haven’t) have been woefully slow and without any support.

In the last 4 months alone after being widowed, she has again been writing to the bank to query terms of the mortgage including whether she is able to pay a lump sum to offset some of the debt.  Whether this would financially be the right course of action or not is irrelevant – Of three letters written, not one of those letters has been responded to, even though at least one was sent recorded delivery.

This is just a small sample of the history.  I have only recently become aware of the issues, and am trying to assist where I can.  I just wonder if there is a case to answer by the bank where there is  huge evidence that my parents wanted to deal with the escalating cost, particularly from 2015 onwards, but complete lack of support from the bank – staling all then time whilst the debt increases.  They were quite happy to provide the E.R. in 2007, but completely unsupportive ever since.

 

Any advice would be greatly appreciated.

Thrugelmir

What advice would you have expected the bank to have provided? Not within their remit to manage their customers finances. The terms of the original product will be clear and explicit. 

nfr

Thank you for your response, although it does cause me to question whether my message has been read and interpreted correctly.
My question was asking advice of forum members about the etiquette and standards applied by the bank here, not what advice we are expecting the bank to give.

Letters written to the bank from year 2 of the E.R. make it clear to the bank that the customer was unhappy with the product.
The customer has then consistently ever since tried to have dialog with their life long bank (remember the E.R. is just one part of their banking history*), and the bank have then just brushed it aside - deliberately I would argue. 

 - Does the fact that the bank agreed to a product change, proceed through the formality of the arrangement, only to drop that without any dialog or notification whatsoever with the customer,  not breach some banking standards?
- Does the fact that recent letters from the customer to the bank, have had no response at all? Again surely financial code of conduct must commit the organisation to response service levels.

If the answers to those questions is yes, surely does the bank not have a case to answer, for deliberately stalling a customers financial planning matters, all the while whilst the debt increases by a significantly monthly amount.?

*As a aside ironically one of my parents was also an employee of the bank in question at one stage, hence long life membership with them.  Unfortunately this was from a time when banking was a mutual partnership between the bank and its customer - sadly something that doesn't appear to exist in today's world.  A lesson they have certainly learned.

Brock_and_Roll

Very poor show from the bank not responding to customer letters -  as a banker myself of many decades I doubt they are being deliberately obstructive however, just useless - probably outsourced their customer services to some poor sods in asia  somewhere.

All this does not alter the basic legal position in terms of the loan however. Do you have copies of the original agreement? - this will surely make clear the position with regards to lump sum payments.

MWT

It certainly looks as though there have been some customer service failings along the way but the matter of the original equity release itself seems to have been considered by the ombudsman and rejected.

So with regard to the 'switch', was it actually characterised as a switch in the letters, or was it planned to take out a new mortgage and use the proceeds to pay off the equity release, and did the correspondence deal with the matter of early repayment charges on the equity release?

Mostly trying to see if there was any sign that the bank were offering anything more than your parents were entitled to under the terms of their existing release, as that would go towards showing that a real loss had occurred as a result of the bank's abrupt cessation of communications...

dunstonh

There does appear to be some customer service failings.   However, I am going to play devils advocate somewhat in my response....

Two days later, they received a letter informing that a switch was not possible as there was no longer anyone employed within  the bank who was suitably qualified to discuss an equity release matter!.  Given the Bank’s failure to deliver what had been offered in writing, at no point did the bank offer any alternative or seek to resolve the matter.  

Most of the banks pulled out of financial advice after 2013.  Most of them never got involved with the equity release in the first place but where they did, it was usually on a non-advised basis. Often it was passed to a third party company.

As the bank did not employ anyone with equity release advice qualifications and permissions then they cannot give advice.  This would include offering any alternative or an ability to seek to resolve the matter.   So, whilst that maybe what they wanted from the bank, the bank cannot do it if they do not hold the regulatory permissions.     

Since 2017, my mother who is in her 80’s has written numerous letters to the bank for advice, whilst contending with my father’s terminal illness. Responses where they have occurred (lots haven’t) have been woefully slow and without any support.

The problem is that the bank have already said they cannot.   Repeatedly contacting the bank over it won't change the outcome.   They cannot breach their regulatory permissions as that would be unlawful.

In the last 4 months alone after being widowed, she has again been writing to the bank to query terms of the mortgage including whether she is able to pay a lump sum to offset some of the debt.  Whether this would financially be the right course of action or not is irrelevant – Of three letters written, not one of those letters has been responded to, even though at least one was sent recorded delivery.

Where is she sending these letters?  I wonder if they are doing the rounds with various departments as no-one knows who deals with it.

I just wonder if there is a case to answer by the bank where there is  huge evidence that my parents wanted to deal with the escalating cost, particularly from 2015 onwards, but complete lack of support from the bank – staling all then time whilst the debt increases.  They were quite happy to provide the E.R. in 2007, but completely unsupportive ever since.

The bank have already stated that they cannot do anything as they do not have anyone with the regulatory permissions to deal with equity release.   So no matter how many letters are sent in asking them to do it, they cannot do it.  That is not going to change unless they decide re-enter the equity release market.    It is outside of their remit now.

Out of interest, did they arrange the equity release themselves or did they use a third-party company to do it?  i.e. did they provide the borrowing or did they use an insurer or equity release provider (it will help us understand where potential liability lies - it may also exp).

So, whilst there is a case for a goodwill gesture for poor service, there doesn't seem to be much of a case for the bank actually doing anything wrong on the equity release side.

It is also worth remembering that your parents would have had a meeting with a solicitor discussing the negatives of equity release and how the debt builds up.  It is also normal for equity release applications to be greater than the amount initially required.  This is to avoid the costs of going back with further applications for more amounts.       Clearing the debt would not be enough.  They did not live within their means. So reducing the debt to zero by porting it into equity release still leaves them with no savings and still leaves the risk of the debt building up again.  It is normal to bolt on a further amount to give them some liquidity.  Nowadays, you would apply for more than you need but only draw what is needed when you need it but 2007 plans were different.    

So, whilst you want to help your mother, you do need to remember that you were not present at all the stages. It was 13 years ago and they got legal advice.  And the FOS have looked at it and rejected it (and the FOS are slightly consumer biased.  Especially with the elderly).   So, on the product side of things, you would expect a 2007 case to have been done correctly (more often than not - a 1987 case would be a different matter).

Stenwold

The moment your mother was informed that they had no one qualified to discuss Equity Release, you should have gone to a broker specialised in it.

ER is a separate beast to standard mortgages in terms of regulation and qualifications required, and not many mainstream lenders offer this service anymore. I'm not sure what else Barclays could do for you?