Offset mortgage and the Ombudsman

grumpy_codger

silvercar said:

Of course the risk is the judge doesn’t understand the intricacies of an offset mortgage in the same way as the ombudsman didn’t.

Cannot the the claimant support the claim with some expert statement? In this case the judge will probably need some other expert opinion to dismiss such statement.

Halevie1

silvercar said:

OP, if you have exhausted the ombudsman route, the only other option is court, as K_S said above. Unless you can engage with IF through very simple questions, like “why is my savings rate not the same as my mortgage rate?” Of course the risk is the judge doesn’t understand the intricacies of an offset mortgage in the same way as the ombudsman didn’t.

Lots of comments which are very useful but the money in the savings account is used to offset the mortgage account before interest is calculated. The interest rates on a mortgage account are different to the interest rate on savings account - hence using the savings to reduce mortgage interest rather than generating taxable income on the savings. I don't know why people are saying "offsetting the interest" as that isn't how offset mortgages work (having had many). If the interest only was offset, offset mortgages would hardly be a benefit. 

Halevie1

grumpy_codger said:

silvercar said:

Of course the risk is the judge doesn’t understand the intricacies of an offset mortgage in the same way as the ombudsman didn’t.

Cannot the the claimant support the claim with some expert statement? In this case the judge will probably need some other expert opinion to dismiss such statement.

I suspect that will end up being the case. My wife is a financial accountant and I've been in corporate finance for my career, as well as running a property business and had many offset mortgages.... but apparently a junior person in the FOS just accepts what a junior person in IF/Lloyds Bank says. Ironic as the ex-CEO of Lloyds Bank agrees with me!

silvercar

Halevie1 said:

silvercar said:

OP, if you have exhausted the ombudsman route, the only other option is court, as K_S said above. Unless you can engage with IF through very simple questions, like “why is my savings rate not the same as my mortgage rate?” Of course the risk is the judge doesn’t understand the intricacies of an offset mortgage in the same way as the ombudsman didn’t.

Lots of comments which are very useful but the money in the savings account is used to offset the mortgage account before interest is calculated. The interest rates on a mortgage account are different to the interest rate on savings account - hence using the savings to reduce mortgage interest rather than generating taxable income on the savings. I don't know why people are saying "offsetting the interest" as that isn't how offset mortgages work (having had many). If the interest only was offset, offset mortgages would hardly be a benefit. 

The way mine works, Coventry BS, is that I have a mortgage balance and an offset savings account. The interest on both is calculated and one taken from the other. So currently (it’s a tracker), the interest rate is 5.25%. They calculate 5.25% of the mortgage, then take off 5.25% of the savings account. When the mortgage is completely offset the difference is zero and so I have nothing to pay that month. That’s why I talk of offsetting the interest, because it’s the interest on both that is calculated and one offsets the other.

silvercar

In your shoes I would look to move to another offset mortgage elsewhere. That way you can calculate the loss that has occurred and you could go to the small claims court to get it back. Until you end the mortgage with IF you don’t know how much this has costed you. By keeping your mortgage with IF it’s costing you each month. In fact, if you don’t have another use for the money, you could just clear your mortgage.

What I wouldn’t do is stay with IF and accept the 1.7% savings rate.

DullGreyGuy

Halevie1 said:

grumpy_codger said:

silvercar said:

Of course the risk is the judge doesn’t understand the intricacies of an offset mortgage in the same way as the ombudsman didn’t.

Cannot the the claimant support the claim with some expert statement? In this case the judge will probably need some other expert opinion to dismiss such statement.

I suspect that will end up being the case. My wife is a financial accountant and I've been in corporate finance for my career, as well as running a property business and had many offset mortgages.... but apparently a junior person in the FOS just accepts what a junior person in IF/Lloyds Bank says. Ironic as the ex-CEO of Lloyds Bank agrees with me!

But if you dont accept that junior person's decision it goes to an Ombudsman who is certainly not a junior person. Most the ones I know have 15-20 years in industry before working for the ombudsman, all hold qualification with a Chartered Institute for their relevant field or are legally trained. Like any organisation, some start at the bottom and work their way up

That is not to say none have ever made mistakes but it would be highly improbable that three different ones have made the same mistake. 

silvercar

DullGreyGuy said:

Halevie1 said:

grumpy_codger said:

silvercar said:

Of course the risk is the judge doesn’t understand the intricacies of an offset mortgage in the same way as the ombudsman didn’t.

Cannot the the claimant support the claim with some expert statement? In this case the judge will probably need some other expert opinion to dismiss such statement.

I suspect that will end up being the case. My wife is a financial accountant and I've been in corporate finance for my career, as well as running a property business and had many offset mortgages.... but apparently a junior person in the FOS just accepts what a junior person in IF/Lloyds Bank says. Ironic as the ex-CEO of Lloyds Bank agrees with me!

But if you dont accept that junior person's decision it goes to an Ombudsman who is certainly not a junior person. Most the ones I know have 15-20 years in industry before working for the ombudsman, all hold qualification with a Chartered Institute for their relevant field or are legally trained. Like any organisation, some start at the bottom and work their way up

That is not to say none have ever made mistakes but it would be highly improbable that three different ones have made the same mistake. 

I’d argue that they have focussed on the wrong thing. Looking at the offsetting etc rather than querying why the interest rate on the linked savings account is only 1.7% and not identical to the mortgage. That could be the phrasing of the complaint, it could be looking at the defence by IF or it could be assuming that the examiner knows how offsets work without any explanation. 

Even @Halevie1 is focussing on (X-Y)xZ%, whereas my XxZ%-YxZ% gives the same result. What the issue is, is that Z% isn’t the same for the mortgage and the savings accounts when it should be.

grumpy_codger

Halevie1 said:

grumpy_codger said:

silvercar said:

Of course the risk is the judge doesn’t understand the intricacies of an offset mortgage in the same way as the ombudsman didn’t.

Cannot the the claimant support the claim with some expert statement? In this case the judge will probably need some other expert opinion to dismiss such statement.

... but apparently a junior person in the FOS just accepts what a junior person in IF/Lloyds Bank says.

You know that you can escalate your complaint within FOS, don't you?

BikingBud

As I understand you can complain about conduct of the investigation but this does not challenge the Ombudsman's final decision.

We are currently trapped in this hole!

DullGreyGuy

BikingBud said:

As I understand you can complain about conduct of the investigation but this does not challenge the Ombudsman's final decision.

We are currently trapped in this hole!

The initial decision is made by an adjudicator or investigator, often you will get early sight before they finally issue the decision. Both you and the company will be asked if you accept the decision, either or both of you can say no. 

If either of you say no then the case is escalated to an ombudsman, they equally may issue an early sight version of their decision for both to comment and then issue their final decision. In this case only you get asked if you accept it or not, the company has no choice. 

If you accept the ombudsman's decision it then becomes binding on the company. If you dont accept it then the process has ended and your next step is court.