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cagpablo

RBS / Virgin One Account - withdraw interest rate cuts

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Hi all,

 

I've had a Virgin One account mortgage for about ten years.

 

In the terms of the loan, the interest rate that I am being charged was guarenteed to follow the changes in the interest rate of the Bank of England.

 

Up until now, that has been the case. However this morning, for the first time, I received a letter from them saying that they will not be passing on the cut in the interest rate on this occasion. I have to say I am outraged at this.

 

Surely this is a breach of contract and they can't do it !

Has anyone else got the same letter, and feels the same way as me?

 

If so, what can we do about it, it's so unfair. Surely thay can't just change the rules because they're starting to feel the pinch.

 

regards

Cagpablo

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I don't think it is a breach of contract per se, most mortgages have a clause along those lines to be honest... however, it may be considered an unfair term if it is not exercised for good reasons. Worth goint to a soliciter, maybe?

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Hi all,

 

Just an update, I'm choking on my Cornflakes with the latest turn of events.

 

I don't believe it. I have written to the bank for an explanation of how they can manipulate the interest rates after agreeing to move them in line with the Bank of England's. But before I even got a reply they'd written to me to say they are going to increase the interest rate again by another quarter point.

 

I have now had their reply and they have said:

"We are also aware that some years ago certain price promises were made to our customers around changes to the Virgin One Account rates following any change to interest rates set by the Bank of England. These promises did not reflect the mortgage terms and conditions, but were a genuine statement of our intentions at the time, and we can only apoplogise if, as a result of the communications, you were ever led to believe that the rate would always track the Bank of England Base Rate."

 

Well forgive me, but "these promises did not reflect the mortgage terms and conditions" sounds like a pretty clear case of mis selling or mis leading to me.

 

I am surprised that other holders of Virgin One Accounts haven't posted to demonstrate their concerns too. It seems now that they've decided in for a penny in for a pound and they're accelerating up and away from the B of E base rate using the credit crunch as a scapegoat.

 

Are we expected to just roll over and take this? When I took my loan, it was a major selling point that the interest rate would be tied to the Bof E rate. It was something they proudly flaunted as it offered some sort of benchmark and security. They have clearly stated in their letter that they did promise to do this, so how can they then just decide to pull the rug on it ten years later.

 

Is there anything here that gives rise to a formal referral to the FSA or FOS for mis selling me and many others their mortgages?

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I too was apalled at what was done earlier this year when the rate was not passed on....does anyone know what r-b-s/virgin one are doing with the interest rate cut announced today 6-Nov-08?

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cagpablo,

 

Did you ever determine whether anything in the original terms and conditions was legally enforceable?

 

I've also had a One account for about 10 years and my mortgage is large so it's getting to the point where it might be worth my while getting legal.

 

regards

Steve

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The .5% cut from earlier on will be applied to our Virgin One account mortgage from 1 November.

 

We got onto them about the rates going up earlier in the year and established that RBS which was the bank that backed the Virgin One Account ( mortgage) had actually 'taken over' - nothing that we could do about it GRRRRRR. Tonight I sw

aw that RBS has announced that it will be passing the full 1.5% cut to its mortgage rates from 1 December - so they're trousering a pretty hefty wedge this month.

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I'm afraid I can't offer useful advice or info about why this is. It is now fully 5 days after BofE reduced rates to 3% and there is STILL an automated message on their phone line saying they are "reviewing" the interest rate. I am as enraged as no doubt every other One Account customer, not just at the prevarication here (clearly they are trying to find ways of justifying NOT passing on the rate cut), but at the shere arrogance. We have only just recently bailed out this bank to the tune of billions, while Virgin have consistently had a higher rate than almost all the major lenders, their justifcation being that it is an offset mortgage. (Hello, so is almost every other product these days as in you can make overpayments whenever you want).

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I am also pretty discusted with the way RBS is responding. It simply updates the phone message every day to say it is still reviewing.

I have sent an email to Alistair Darling darlinga@parliament.uk telling him the bank has misled him over the action they were promising to take over the BoE interest rate cut. We do have a varaible rate mortgage with RBS, whether they like it or not, and we know that they promised Darling last friday that they would bring down their variable rates by the same amount.

I suggest we try and get as many people as possible to email the chancellor in the same vein.

I also spent a long long time on the phone trying to talk my way up the tree in RBS, but got nowhere, except an admission that they were being inundated with calls of complaint and the customer base "was not happy". I think the only way is to keep piling the pressure on them by whichever way you can until they realise the groundswell that is there. No business, even banks, like it when their customers start to hate them. Anyone know any financial editors on nationals who may pick this story up?

I also note that the NatWest "One Account" is no longer being offered to new customers and on the Virgin One as was website they quote a rate of 6.2% vs a typical market rate of 6.5%.

I have been a customer now for 11 years and I have persuaded at least 6 of my friends to join the bank over that time. RBS will certainly have to change their ways before I persuade anyone else to join.

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I've previously done the One Account favours by telling people how happy I was with the service. I'm sure they have had good business due to us. Like people here though I feel like they are breaking a promise with regards to the tracking the base rate.

 

I'm going to join the crowds and write to them tomorrow to demand my 1.5% cut and express my willingness to move mortgages. Maybe a letter explaining that I believe them to be in continuing breach of contract will at least get a proper letter of explanation from them.

 

I've considered for a while asking the dozen people I know with the One Account if they want to sign up to say cut it or lose us. In total a couple of million in business should be more of a factor for them than just one or two grumbles.

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Is there anything we can do to get V1 to pass on the rate cuts. As of today they are still dithering.

 

RBS have passed on the rate cut why can't V1.

 

We are all paying 2% higher than we should be, that amounts to about £266 per month in my case.

 

I joined in the begining and was PROMISED rate changes would be passed on the next day, its all very well them saying that it was not in their terms and conditions, i think they need to look up the meaning or the word Promise! Con more like it.....

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I have today received the following from V1:

 

The One Account is a variable rate product and does not track or never has tracked the Bank of England Base Rate, nor is it linked to either the RBS or NatWest Standard Variable Rates. We use any changes in the Bank of England base rate to review One Account interest rates and I appreciate that you believe we should make a decision more quickly. In setting interest rates, we consider a wide range of factors including the cost of funding variable rate mortgages, which is currently significantly higher than the Bank of England Base Rate. At this time our interest rates remain under review and I have no further information, but I can assure you we will communicate any changes in line with the Terms and Conditions of your account.
I really think that the ombudsman should get involved here; what do people think?

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"does not track or never has tracked the Bank of England Base Rate"

 

Have I missed something over the last 10 years, but it always has tracked the Bank of England Base Rate.

 

Something needs to be done.... As soon as the markets stabilise I am OFF!!

 

This product is no longer viable and will die (maybe that’s what they want)

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No doubt they will weasel out of their obligations (to keep the rate tracked), and I haven't studied the V1 T&Cs small print enough to be able to challenge them on it. I expect they are gambling on not many of their customers having the time/energy etc to move their mortgage in these times, so feel they have got us over a barrel. I am disgusted at the insulting way they keep updating their recorded message saying they are "reviewing" their rates. They could at least have the balls to admit they haven't the slightest intention of lowering their rates, unless they get forced to do so. I personally would move my mortgage in a flash but can't right now, so despite the fact we taxpayers have all just bailed them out, we go on paying - in my case - over £100 a month over the odds. That's their way of saying Thank You. I will never forgive or forget this, and if anybody has any practical suggestions on what else we can do, speak up!

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Yes, the fact that they are stating that the V1 rate is not linked to the RBS rate suggests that they won't lower it, even when they tell the Government that the RBS rate has been lowered.

 

Time for the Ombudsman and my MP, methinks.

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I think the fixed facility or gap between balance and facility leaves RBS open to massive negetive equity problems and they know it. Anyone in financial difficulty who kept a fixed facility will be able to draw back up to the level they agreed in much more prosperous times. They are deperate for some to move. My advice if you can go and get a lower rate mortgage do so, unless you need that facilty as a backup.

 

If like me you can't move, my household income has dropped since taking out the mortgage then we need to need to make noise that they are ripping us off. But who to? I guess the goverment now as they own it!

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It's a fallacy to think RBS is exposed to additional negative equity risk on account of the ability to increase borrowing at any time to the account limit. If you run your One account at the limit all the time, you simply have a conventional mortgage. If you are below your limit, you are ahead on payments compared to a conventional mortgage. A One Account is never more exposed to negative equity than the equivalent conventional mortgage.

 

Because the graduated interest rate applies to the whole loan, the true interest rate on the top slice of the facility is very high. In fact if you have a 95% facility, you are effectively paying unsecured credit card rates on the top 5%. So RBS is well paid for its risk.

 

I think what RBS is afraid of is large numbers of One Account holders maxing out their loans at short notice in response to a future political / economic event, requiring more than normal liquidity.

 

I am one of the ones who took the mortgage immediately it was available and received the letter promising to track base rate, and it has been a wonderful tool for managing through financial difficulties such as redundancy.

 

At the very least it should be tracking Libor, since that is what determines RBS costs, even if RBS break their promise on BOE rate tracking.

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Well finally today the OneAccount has reduced its interest rate by 1% - the issue now is that the reduction is not the 1.5% passed on by many of the other banks.

I suspect the point made by Sleepyg that RBS are worried that a percentage of account holders hit by the credit crunch may decide to utilise their full borrowing facility - causing a run on required funds. So limiting the reduction to 1% may discourage people from doing so.

Whatever the justification for the way RBS is behaving, there is something strange about the way the OneAccount has been run since it was purchased from Virgin.

I was also intrigued by a statement from one of the (very helpful) staff at my local RBS branch. She commented that RBS "...simply act as the clearing bank for the OneAccount" & that is why whenever I go into my branch a member of staff tries to get me consider moving from the "OneAccount" offset mortgage to the RBS Offset mortgage ! When I ask what the difference is between 2 offset mortgages both apparently from RBS/NatWest, no-one has an answer.

Call me suspicious but I sense that the OneAccount has some form of commercial independence from RBS/NatWest (perhaps the OneAccount is a joint venture over which RBS has limited control or perhaps there were certain restrictions placed on the OneAccount when it was sold on by Virgin ?). Either way, RBS branches certainly seem keen to encourage OneAccount holders to move their business to the "RBS Offset" offering.

I am awaiting a call back from the Mortgage Advisor in my local branch so I can find out how the interest rates compare between the 2 accounts & if RBS applied the full 1.5% reduction to their own branded offset mortgage as a further encouragement for OneAccount holders to move their business ?

If anyone can shed any light on the "ownership/relationship" question between the OneAccount offering & the RBS offering I would be very interested.

... GP2008

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It's a disgrace that RBS Group have headlines about reducing by a full 1.5% all variable rate deals, and yet The One account got 1%. Come on Stephen Hester, do the decent thing and put the full 1.5% cut. Disappointing.

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I wrote to our MP Rt Hon Kelvin Hopkins about this lot - what a waste of effor that was! My husband was whooping with delight when I got home from work tonight about this 'generous gift' I take the view that they owe us 1.5% for the last cut plus .5% for the October cut and that they have trousered nearly a months worth of 'reduction't that should have been passed back to us. RBS are the bank backing this and as we own 60% of this bank now I reckon they 'jumped before they were pushed'.

 

Incidentally one of the chaps on Virgin One account account management team told us that he was also praying for them to get their a**es in gear as he too had a mortgage with them and the pips were squeaking!

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Hello all - and thanks for your very helpful threads. I believe we have got 1% in no small part due to this forum and the pressue we have been putting on the bank and MPs. I also wrote to mine (what a waste of space they are, but that's another story). I was also intrigued to hear from a V1 manager that RBS doesn't own Virgin One in the conventional sense, that it is the "clearing bank". I have no idea what this means. Still massively disappointing that it is 1% and that it starts now (it should be backdated). I got letters from V1 in May and June 2004 saying that after BofE rate increase their rate was going up the same amount FROM MIDNIGHT TONIGHT!!! Who is the banking omudsman and how does one write to him/her?

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Yes Paddy, I have the same copies of cuts as well as raises of the interest rate. V1 always rose and cut rates as soon as the BoE raised or lowered theirs. I had a rate increase though this year with the first cut so they are still 1/4 percent up!!! :(

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Does anyone have the original written info stating that the One Account would track the base rate that they could scan and upload (or post to me and I'll do it and return it).

 

It would be difficult to make an official complaint without it; and I can't find my copy.

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I'm new to this forum but, like a lot of other people it seems, I too am rather fed-up with RBS and the One Account interest rate scenario that is currently going on.

 

I've recommended friends and family to the One Account (and some of them have taken it up) and I've always been pleased with it. In fact, I still am - apart from this interest rate business.

 

I contacted them on 01 December to ask why they had not passed on the full 1.5% interest rate cut and received this reply:-

"Thank you for contacting us through our website. With effect from 1 December, interest rates on your flexible mortgage reduce by 1%. Your flexible mortgage is a variable rate product but is not linked to Bank of England Base rate or RBS/NW Standard Variable Rate. In deciding rates on flexible mortgages, we have had to consider a wide range of other factors in addition to the 1.5% Base Rate reduction, including market conditions and the cost of variable rate funding which is not linked to Bank of England Base Rate. If you have any further queries regarding this, or any other matter, please feel free to contact us via the online service or call us on 08456 000 000. We are here Monday to Sunday, 8am to 11pm. Kind regards...Virgin One account"

 

Looks like a standard canned response to me.

 

The Conditions booklet that I have, dated October 2001, states that the interest rate may change at any time but it does not say it is linked in any way to the BoE base rate. I have always held the impression that it is but I cannot find anything in writing to that effect.

 

We all receive the letters that state when interest rates change that "all One Account interest rates will decrease/increase by the same amount from midnight on *** insert date of letter here ***". That seemed to stop with the letter dated 14 April 2008, after a succession of interest rate rises and two reductions.

 

Basically the way they're treating customers really isn't good enough is it?

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