Letter to MP about West Brom Tracker Margin Hike

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Dear Sir

I suspect that I am but one of millions of mortgage borrowers who took a tracker rate mortgage on the understanding that I would pay a fixed margin over the Bank of England base rate for the life of my mortgage contract. Indeed, that is what all of the lenders promotional material, the advice from my broker and my mortgage offer eluded to.

However, in February this year I heard that Bank of Ireland “BoI” intended to increase the margin on 13,500 tracker rate mortgages in June on the grounds of some small print hidden away in a Mortgage Conditions booklet. I thought at the time that this had to be wrong and I joined a Class Action campaign via the Property118 internet forum. I was not affected at the time but my concern was that other lenders might follow suit.

Last month I received a letter from one of my mortgage lenders (West Brom Mortgage Company) advising me that they would be increasing the tracker margin on my mortgage by 2%. Their excuse was difficult trading conditions but frankly, that’s not my problem, I too have suffered difficult trading conditions over the the last few years like many others but I have honoured the contracts I entered into. My concern is that West Brom’s marketing information and their offer letter did not meet the FCA and ASA principles of being “clear, fair and not misleading”. It is my understanding that clauses in contracts which are so vitally important should not be buried in small print in an accompanying brochure but should be clearly stated on the primary documentation, contracts and marketing materials. I have researched this subject and the Wikipedia legal definition supporting my understanding of this is “contra proferentem”.

Further, West Bromwich have confirmed that they are only increasing their tracker margins for people with three or more properties.  The BoI decision affected both landlords and home-owners regardless of the number of properties but only targeted borrowers with mortgages taken prior to the Oct 2004 mortgage regulations date. Surely this is discrimination? It is clear to see that these lenders are using grey areas in the law to profiteer and exploit their customers because they think they can get away with it.

If these lenders get away with this, what’s to stop them, and other lenders, doing the same to all borrowers with tracker rate mortgages? Just because I have more than three mortgages doesn’t necessarily mean that I am in a better position to pay more than a person with just one mortgage does it? Friends of mine, also in your constituency, have only one mortgage with the BoI and some of them are unaffected because they took their mortgage in after October 2004 but others are affected due to taking their mortgages with identical terms prior to the Oct 2004 date. Is this fair?

An action group was formed when the Bank of Ireland increased their tracker mortgage rates as many people were outraged, not just those directly affected but also people who could see the writing on the wall for their tracker rate margins if the BoI got away with their actions. Funds were raised by the group and Counsels opinion of some 32 pages was obtained and submitted to the Financial Conduct Authority “FCA”. We believe the FCA’s response has been a whitewash despite pressure having been put on them by Andrew Tyrie MP.  The FCA have simply used the BoI response to the case as a reason not to pursue it.  The FCA did not obtain their own independent advice so the FCA has not acted as an independent arbitrator.  The BoI response was a note from their barrister who they asked to find ways round the legal arguments presented by the group.  It was not an independent review of the actions of BoI but despite this the FCA used it as a reason not to progress the matter.

There are now two mortgage lenders who are not treating customers fairly and doubtless many others watching to see what will happen as a result of this. I have been making preparations for a rise in the Bank of England base rate as I know it will happen at some point. What I’ve never prepared for or expected is for the terms of my mortgage contract to be changed arbitrarily and for such changes to be applied in such a grossly unfair manner and without the FCA taking what I consider to be proper action in relation to complaints concerning this.

I am not a lawyer so I have obviously only touched on a few of the legal arguments submitted to the FCA by the group affected by the BoI scandal. The group affected by the actions by West Bromwich Building Society will also be seeking Counsels opinion and submitting this to the FCA.

My request to you is that you raise my concerns about the actions of these mortgage lenders with the appropriate Ministers in the Houses of Parliament. I would also like you to raise the point to the House about how the FCA have acted in response to the financial scandal which has been reported to them.

Yours faithfully



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