Halifax to pay £500m to mortgage customers

[alfwithhair]

http://www.bbc.co.uk/news/business-12524732

[Michael Browne]

Halifax to pay £500m to mortgage customers

 

 

The Halifax will make payments to 300,000 mortgage customers, up to a £500m total, after reaching a deal with the Financial Services Authority (FSA).

 

The bank, now part of Lloyds Banking Group, admitted confusing customers about its right to charge them more for their standard variable rate mortgages.

 

The Halifax raised the margin on some of these mortgages from 2% to 3% above base rate in January 2009.

Lloyds said its agreement had been a "voluntary" and "proactive" one.

 

"The group is committed to running its business with the highest levels of integrity and treating its customers fairly, and therefore believes that a proactive co-ordinated programme to identify affected customers and make goodwill payments is the appropriate course of action," Lloyds said.

 

Halifax said that some customers would receive a flat-rate payment of £250.

 

Others will receive a variable payment, related to the rise in their interest payment and the size of their mortgages. This could range from hundreds of pounds to several thousand pounds.

 

The problem arose in the autumn of 2008 and early 2009 as the Bank of England progressively cut its official bank rate from 5% to 0.5% to help stave off the effects of the banking crisis. The Halifax was capping the standard variable rate (SVR) to customers who were also being locked into the mortgages through early repayment charges.

 

Halifax mortgage offers issued between September 2004 and September 2007 had not been as clear as they could have been and had the "potential to cause confusion".

 

The firm not made clear that the lender's terms and conditions meant it could later vary the charge for customers who went onto its standard variable rate (SVR).

 

The problem was first highlighted at the time by Ray Boulger of mortgage brokers John Charcol.

 

He had queried whether or not the Halifax had the right to change its SVR from a 2% margin over base rate to a 3% margin if the offer documentation, stating the key facts of the deal, had not explicitly mentioned the bank's right to do so. "The issue was whether the terms under which the Halifax could vary the rate cap had been met," he told the BBC.

"I am surprised it has taken to so long to sort out."

 

Typically the affected customers were those whose mortgage deals reverted to the Halifax SVR once their fixed-term or tracker rate deal had expired.

 

The Halifax raised the ceiling on its SVR from bank rate plus 2% to bank rate plus 3% with effect from January 2009, citing "extenuating economic conditions".

 

This meant that some 300,000 customers at this point were charged more than would otherwise have been the case.

 

"We have had very few complaints - in the tens, fewer then 50," said a Halifax spokesman.

"It has been a very complex area, involving digging out lots of historical mortgage documentation," he added.

 

About 600,000 customers will be contacted by the Halifax, however, about 300,000 customers will not receive a payment as they were not paying the SVR on their mortgage during the period affected.

 

Those who were affected and who are still with the Halifax will have their mortgage accounts credited in April this year.

 

If they have left the Halifax they will be traced and offered a cheque.

 

http://www.bbc.co.uk/news/business-12524732

[Michael Browne]

Halifax to pay £500m to customers after mortgage rate blunder

 

Halifax is set to pay £500 million in compensation after it failed to inform 600,000 customers that it was increasing the rate it charged on its standard variable rate mortgage.

 

 

 

The lender has reached a voluntary agreement with City watchdog the Financial Services Authority to pay the redress because wording in its mortgage offer documents had the potential to cause confusion.

 

The issue affects people who took out a mortgage between September 20, 2004, and September 16, 2007, and relates to the group's decision to increase the cap on its standard variable rate mortgage from 2 per cent above the Bank of England base rate to 3 per cent above it.

 

The problem relates to the wording in the offer letter that was sent to people taking out a mortgage during this period, which may have made customers think Halifax would contact them if it was increasing the cap on its SVR.

 

But in reality the group only had to contact customers who were paying the SVR on part of their mortgage, but also had another loan with the group which carried early redemption charges.

 

Although customers would have been informed that their mortgage repayments were changing, Halifax did not make it clear that part of the reason for this was because it was increasing the SVR cap by 1 per cent.

 

The issue was made more confusing by the fact that the Bank of England base rate was failing rapidly during the period in which the cap was changed, meaning the amount people on SVRs were paying was changing on a monthly basis.

 

Halifax, which is part of taxpayer-backed Lloyds Banking Group, will begin writing to the 600,000 customers affected from April.

 

It expects to make payments to around 300,000 of these people.

 

The money individuals will receive will be based on the difference between repayments if the SVR had been 2 per cent above base rate and the 3 per cent above base rate that it was charged at.

 

Lloyds Banking Group said: "Halifax is committed to operating with the highest levels of integrity and treating customers fairly and felt that a proactive co-ordinated programme to contact affected customers and make goodwill payments was the appropriate course of action."

 

http://www.telegraph.co.uk/finance/personalfinance/8338241/Halifax-to-pay-500m-to-customers-after-mortgage-rate-blunder.html

[Michael Browne]

LLOYDS BANKING GROUP ANNOUNCES VOLUNTARY AGREEMENT WITH THE FSA WITH REGARD TO CERTAIN HALIFAX MORTGAGE CONTRACTS

 

Lloyds Banking Group plc announces that it has reached a voluntary agreement with the FSA in relation to initiating a customer review and contact programme with regard to outstanding concerns with the variation of limits of some Retail mortgage contracts. This specifically relates to some Halifax mortgage customers, where the wording in the mortgage offer documents received by these customers had the potential to cause confusion.

 

This proactive agreement follows conversations between Lloyds Banking Group and the FSA to address this potential confusion. The relevant mortgages were written during 2004 - 2007 by Bank of Scotland plc under the 'Halifax' brand, and through the contact programme, goodwill payments will be made to affected customers. To effect these goodwill payments, Bank of Scotland plc has applied for a Voluntary Variation of Permission (VVOP) to carry out the customer review and contact programme to bring it within section 404F (7) of FSMA 2000.

 

The Group is committed to running its business with the highest levels of integrity and treating its customers fairly and therefore believes that a proactive co-ordinated programme to identify affected customers and make goodwill payments is the appropriate course of action.

 

Lloyds Banking Group is making a provision of £500 million in relation to the contact programme within its 2010 accounts which is expected to fully cover the payments.

 

http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail.html?announcementId=10793385

[Michael Browne]

Information about the announcement on our Halifax Standard Variable Rate

 

Faq's on the halifax website:

 

http://www.halifax.co.uk/mortgages/help-and-advice/existing-customers/Halifax-Standard-Variable-Rate-announcement/

[faltskog5450]

Hi, does anyone know if this is only Halifax or if it is all Halifax companies. Ie Birmingham Midshires?

 

Cheers