FCA think it might be OK for lenders to ignore contractual terms

FCA think it might be OK for lenders to ignore contractual terms

11:51 AM, 8th July 2014, About 8 years ago 32

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This week our favourite journalist at The Telegraph (Nicole Blackmore) wrote an article entitled “Should mortgage lenders be allowed to change mortgage terms” FCA think it might be OK for lenders to ignore contractual terms

What an outrageous question you might think. However, it’s not Nicole’s question, it is a question posed by the FCA!

Mark Smith from Cotswold Barristers commented …

“This is the line that worries me most “The FCA stated: “Lenders can change their regulated mortgage contracts after the point of sale without treating their customers unfairly.”

He then went on to add ….

“This is utter rubbish. 

A contract cannot be ‘changed’ by one side without agreement of the other side. A term can be varied only if the contract permits it. This is the whole nub of the argument we are having with West Bromwich Mortgage Company.”

David Lawrenson, a consultant at Letting Focus and an expert on the residential property market responded by writing the following letter to the FCA …..

“Dear Sirs, 

I see at the FCA you are asking for the public’s views on whether mortgage lenders should be allowed to alter mortgage terms and conditions mid term.

Funny that, but I thought a contract was a contract, was a contract – and was for life. I must have missed that in the small print.

Perhaps I should now write to all the lenders I have mortgages with and tell them that due to changes in “the funding environment” (i.e. I fancy a yacht and a racehorse) I will now be paying off their buy to let mortgage loans at rate of 0.1 per cent per annum. How would they like that, I wonder?

How on earth can you, at the FCA, even have the gall to be not upbraiding these lenders, never mind seeking advice from Joe Public on whether they can cheat in this way.

The landlords affected by the West Bromwich and Bank Of Ireland’s decision to cheat in this way was appalling – and you let them get away with it, so now the landlords affected have to go to court to enforce their rights. You really should be ashamed of yourselves and are now seen as something of a laughing stock and stooge for the financial services amongst the landlord community.

These landlords made a bet with the lenders on tracker mortgages – and they won. They often paid high application fee and high initial interest rates to get the benefit of a long term “rest of life” tracker rate later on in the term of the mortgage.

Now the tide has turned and the lenders are losing money, do not like it and would like to wriggle out of the contract.

Tough! They would not let their borrowers wriggle out, so why should they be allowed to.

And you should stand up against lenders – because this is simply cheating. You should not be wasting time asking for consultation on whether or not this is cheating.”

You can read my response in the comments section below the article The Telegraph – LINK HERE

If you would like to express your disgust directly to the FCA their email address is mortgage.dp@fca.org.uk

If you are into Twitter, please re-tweet the following




17:51 PM, 8th July 2014, About 8 years ago

It is unbelievable that the FCA think it might be okay for lenders to ignore contractual terms.

A contract is a contract and cannot be 'changed' by one side without the agreement of the other side - unless the contract permits it.

The FCA should be ashamed of themselves.

Lawrence Squid

20:47 PM, 8th July 2014, About 8 years ago

"The FCA stated: “Lenders can change their regulated mortgage contracts after the point of sale without treating their customers unfairly."
Surely then, the borrower too can "change their regulated mortgage contracts after the point of sale without treating their lender unfairly".
I'm delighted to change our mortgage contract, and write the debt off, and with the apparent SUPPORT of the FCA. Marvellous!
Since we can change any old contracts we like, I'll take a look at my mobile phone contract next.
I used to work in an Intensive Care Unit: if the FCA had been running it, it would have been strewn with dead bodies on a daily basis.
FCA: Farcical Clown Antics

Tricia Collick

8:42 AM, 9th July 2014, About 8 years ago

I also seem to remember that there was a law against 'misleading advertising' and small print to hide clauses, this was certainly the case with Bristol and West and having taken over the mortgage contracts, I assume Bank of Ireland picked up that liability ?

Neil Patterson View Profile

9:31 AM, 9th July 2014, About 8 years ago

Reply to the comment left by "Tricia Collick" at "09/07/2014 - 08:42":

These fell under the Financial promotions act in conjunction with the CMLs Treating Customers Fairly.

All financial promotions should be accurate, fair, not misleading, contain all costs, terms and interest rates and not use Jargon eg plain English.

Andy Bell

12:23 PM, 10th July 2014, About 8 years ago

It looks like the FCA fairness test is the Hocus Pocus they are hiding behind. It's just a gloss to use with some fancy graphics and a time consuming and undoubtedly biased consultation.

It is plain to see they are coming from the side of financial institutions. When one of their funders says, with their bottom lip sticking out, "It's not fair that we can't make money on these contracts, we always did before, it not our fault that things changed, boo hoo..." the FCA says "Yes we thought you would make a shed load as well, I agree it's just not fair."

So the FCA view is, it's not fair that the lender has to stick to a contract that it's not making money on, so breaching the contract makes things fair and it passes their fairness test.

In the eyes of the FCA Fairness trumps the Law.

It's up to the Treasury to force the FCA to go against the grain and look at fairness from the borrowers point of view, and we already know the Treasury's response.

Paul Norris

15:23 PM, 11th July 2014, About 8 years ago

I recently emailed my local MP Tim Loughton in regard to Property 118's Skipton BS campaign and received this reply. Make of it what you will but it seems we as consumers are expected to take independent legal action to ever hope of being treated fairly....as the government doesn't want to know.

Dear Mr. Norris,

I do apologise for the delay in responding to and acknowledging your email sent to Tim Loughton MP last month concerning Skipton Building Society.

Mr. Loughton has made enquiries on your behalf with the Treasury and, given that the wheels are already in motion for legal action to take place, I am afraid that they are not in a position to be able to comment here.

The Treasury have advised Mr. Loughton that it was a matter for the Financial Conduct Authority (FCA) to consider any allegations of mis-selling (in which case the individuals should contact the FCA directly) or, if individuals wish to make a complaint against the financial institution itself about their treatment, then they should contact the Financial Ombudsman Service.

Ultimately, decisions concerning the pricing and availability of loans, including the level of interest charged, remain commercial decisions for lenders, and the Government does not seek to intervene in these. Although the Treasury sets the legal framework for the regulation of financial services, it does not have investigative or prosecuting powers of its own and is not able to intervene in individual cases.

Therefore, responsibility for determining whether a mortgage has been mis-sold is a matter for the Financial Conduct Authority. However, the courts can decide the fairness of a contract term under the Unfair Terms in Consumer Contracts Regulations 1999 and it is up to individuals if they wish to pursue this matter.

With regard to the EDM, I am afraid that Mr. Loughton does not sign or table EDMs, regardless of the cause or subject.

Yours sincerely,
Caroline MacNaughton

Caroline MacNaughton
Office Manager to Tim Loughton MP
Member of Parliament for East Worthing & Shoreham
Tel: 0207 219 4471 Fax: 0207 219 0461

John Frith

23:28 PM, 11th July 2014, About 8 years ago

And there you have it. Rightly or wrongly, the regulatory authorities can simply duck the issue by saying it's a matter for the civil courts to decide.

I've been through this loop already. In 2007 I signed an agreement to take a mortgage with Marfin (aka Laiki) Bank for a property in Cyprus at LIBOR + 1.65%. When I later drew down the mortgage, they told me they had decided I should pay Euribor + (about) 4.5%.

I eventually took it to the only regulator I could find, the Bank Supervision & Regulation Dept. of the Central Bank of Cyprus, who made it clear they were not interested, saying they "cannot intervene in the contractual relationship between Marfin Popular Bank and myself".

I've had two brushes with regulatory authorities - this one in Cyprus, and one in Jersey (in Jersey it was over an Investment Trust). In both cases my perception was that I was an expendible pawn in a much larger power interplay between the regulator and the entities - and if my complaint didn't aid them in their agendas - they weren't interested.

Shakeel Ahmad

10:24 AM, 12th July 2014, About 8 years ago

These bodies are in the pockets of the Financial institutions including the Financial Ombudsman.

Small issues of missing DD/STO they come on the side of the consumer any other issues they always favor the financial institutions.

I am not sure who funds the FCA. The Ombudsman is however funded by the Banks.

Tricia Collick

10:34 AM, 12th July 2014, About 8 years ago

Reply to the comment left by "John Frith" at "11/07/2014 - 23:28":

In general I agree with John, the authorities are there to make us think we are beng looked after when in fact we are minnows in the pond and only useful as voters but not to expect help !!

I just sent my discussion document reply to the FCA, not that I am expecting them to do anything, like all regulators they are (I think) paid for by the industry they regulate so why are we surprised they usually come down on the side of their industry.

In my response I emphasized, among other things, that 'advertising to trap' should be illegal, eg claims that mortgage terms were 'for the life of the mortgage, 'small print' to deceive, that I am 'trapped'.
These were all words used in the FCA discussion document.
I feel I have been 'mis-sold' based on the adverts.

Ed Atkinson

13:06 PM, 16th July 2014, About 8 years ago

Folks, What is the latest on the West Brom case? Is there a Court date?

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