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

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Mark Alexander - Founder of Property118 View Profile

14:34 PM, 16th July 2014, About 8 years ago

Reply to the comment left by "Ed Atkinson" at "16/07/2014 - 13:06":

Not yet, but Mark Smith is chasing.

Sam Addison View Profile

23:05 PM, 2nd August 2014, About 8 years ago

It is essential that Mortgage lenders are able to change contract terms AS LONG AS THEY ARE NOT UNFAIR TO THE LENDER. Changes to the law may make contract terms illegal. If the terms cannot be changed then the contract will have to be terminated with possibly disastrous results to the lender. Similarly, should a lender go bust through not being allowed to change terms - again the result may be disastrous to the lender.
While I do not like the idea of changing a contract term, the ability to do so if absolutely necessary is important.

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