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FSA Unfair Mortage Terms

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Mortgages - Legal Mortgage Deed

 

 

 

 

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Challenging unfair terms in financial contracts

Reporting unfair contract terms

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London Scottish Mortgages

We reviewed two terms in this contract.

Term 1

What did we think was unfair?

A term appeared to give the firm extensive freedom to impose charges on customers. It also said that customers would pay the cost of any enforcement proceedings.

Why did we think it was unfair?

The term appeared to allow unreasonable freedom to impose charges. It also appeared to make customers pay for enforcement proceedings even if they began because of the firm’s negligence, or the firm lost those proceedings.

What has the firm done?

The firm agreed to make the term more reasonable and reduce its freedom to impose charges on customers. Also, the firm will not pass on the costs of enforcement proceedings unless they are rightfully started.

Old term

'You must pay on a full and unqualified indemnity basis all fees, expenses, taxes, liabilities and legal and other costs... in:

(a) the preparation, completion, registration, administration, protection and enforcement (including the costs of any proceedings) of this mortgage…'

New term

'You must pay on a full and unqualified indemnity basis all fees, expenses, taxes, liabilities and legal and other costs …reasonably incurred by the Lender in:

(a) the preparation, completion, registration, administration, protection and rightful enforcement (including the costs of any proceedings) of this Mortgage…'

Term 2

What did we think was unfair?

In the mortgage terms and conditions there was a term stating that early repayment charges may be payable. There was no such term in the Legal Mortgage Deed.

Why did we think it was unfair?

Customers reading the Legal Mortgage Deed might think early repayment charges do not apply.

What has the firm done?

The Legal Mortgage Deed now includes a cross-referencing clause so customers know that terms covering early repayment charges are in the mortgage terms and conditions.

New term

'Should you wish to pay the Secured Amounts early, the Lender has the right to make an early settlement charge. The charges that will apply are set out in the Offer and the terms that will apply in relation to early settlement are set out in clause 6 of the Loan Terms and Conditions.'

 

 

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