Property118 Members vs West Bromwich Mortgage Company

Property118 Members vs West Bromwich Mortgage Company

10:25 AM, 3rd March 2014, About 8 years ago

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UPDATE – 31st March 2014

Since publishing this article our campaign has raised over £450,000 and legal action has now commenced. The official closing date for borrowers to be represented in this action was 28th March 2014. However, it may still be possible to be included in the representative action by paying additional fees to cover administration and Court fees to be added to the list of represented claimants. For further details please Contact Carla Morris-Papps at Cotswold Barristers – telephone 01242 639 454 or email carla@cotswoldbarristers.co.uk

West Brom Tracker Mortgages

Property118 Members vs West Bromwich Mortgage Company

Property118 Members vs West Bromwich Mortgage Company

Borrowers representing 84 mortgage accounts affected by the West Bromwich Mortgage Company 1.9% rake hike to their tracker rate mortgage margins attended a secret meeting of paid up campaign members on 27th February 2014. At that meeting it was confirmed that 420 affected mortgages are currently represented by the campaign group.

Property118 had previously created a secure forum for paid up members of the group to discuss various legal strategies, one of which was a proposal to West Brom to consider arbitration as an alternative to Court action. Each member had paid £240 for each affected mortgage plus a contribution to a campaign marketing campaign.

Arbitration was proposed for tactical legal reasons which were explained by the groups advisers, some details of which must remain confidential for legal reasons.

This would have been significantly quicker and cheaper for all concerned and had massive upsides to West Brom in that the outcome would be confidential. In other words, if West Brom had lost the case, nobody would have “officially” known about it other than those who had already paid to be a member of the campaign group. This would have meant the worst case scenario for West Brom would be losing no more than 10% of their reported £19 million of additional annual profits from this rate hike.

West Brom refused!

This refusal now plays very nicely into our hands for litigation purposes as it will be frowned upon by the Courts, especially if we lose our case and end up having to pay costs associated with the David and Goliath battle. 😉

The attendees of the meeting voted unanimously to proceed immediately with litigation on the basis proposed by (Mark Smith – Barrister-At-Law) as explained below. Thanks were offered to Justin Selig and his team at The Law Department for his sterling work to date in helping us get to this position. Without their help our campaign may never have got this far.

Litigation will commence during the week of 31st March 2014 with the service of Court Papers. This provides a final opportunity for any remaining affected borrowers to commit to the action by Friday 28th March.

We already have more than double the necessary funds on account to pay our own legal team. Mark Smith has agreed to represent borrowers for a fixed fee of £120 + VAT per affected mortgage subject to there being at least 250 borrowers committed. Further details in his Terms of Business and Instruction letter which can be downloaded by completing the form at the bottom of this page.

Existing campaign members are also reminded that they MUST complete and return the instruction form  to Mark Smith to act for them and the required additional funds by 28th March 2014.

The deadline for submission of instructions has now expired, sorry.

Costs Funding

The primary concern of existing members that had to be overcome was their potentially unlimited liability to the West Brom’s legal costs in the event of losing the case and the “open cheque book” often associated with legal cases. It was agreed that all fears could be overcome by creating a fund to be held in a BARCO escrow account (BARCO is the Bar Council – the regulators of Barristers). This account will provide evidence to the Courts that we have sufficient funds on account to settle the other sides costs in the event of losing the case and having an adverse costs order awarded against the group.

The first step of the legal action will be a costs hearing, as part of a “Case Management Conference”. This is where both sides must submit their costs budgets for the case to the judge and where the judge decides upon reasonableness. If either side fails to do this then the maximum they can claim for costs against the other side is the Court fee, i.e. £175! It is extremely rare for judges to award costs in excess of the agreed costs budget.

Our estimate is that based on the number of affected mortgages being represented, and the possibility of more people now wishing to be represented at this stage, the BARCO account could contain as much as double the other sides costs budget. This is why we are so confident about costs not exceeding the amount of funds that will be held in escrow. In the extremely unlikely event of the groups funds being insufficient to meet a potential costs order the group would have an opportunity to withdraw their case and settle the other sides costs to date.

If/when we win, the contents of the BARCO account will be rolled over to deal with all of the costs associated with the inevitable appeal case and if/when that is won the funds will be returned to members. If we lose, the contents of the escrow account will be used to pay costs awarded to West Brom and the balance of funds will be returned pro-rata to members.

The case will be fought on the basis of a representative action. This means that the ruling of the Courts will only apply to those borrowers who have paid to be represented in the case. There will be no free rides!

We fully appreciate that some affected borrowers will not be able to raise the necessary funds in time to be part of this action so there is a Plan B. Affected borrowers who are not represented may have another opportunity to make claims in a few years time. In the meantime they will continue to pay the higher rate and will probably be expected to forfeit any refund of overpayments in return for a no-win-no-fee arrangement. This could be a far more expensive option, hence the reason why so many affected borrowers are so keen to be part of the imminent legal action.

The legal strategy and process we are undertaking will be a very simple one. There will be no witnesses called so there will be no surprise twists such as those often seen on TV where a new witness or new evidence appears at the last minute. On this basis, we anticipate the case, including any appeal, to be concluded before Christmas.

We will only be asking the Courts to rule on two things:-

1) Based on the documentation produced by West Brom, do they have the right to increase the tracker margin?

2) Based on the documentation produced by West Brom, do they have the right to call in loans within 28 days without the borrower being in default?

There has been lots of discussion about whether West Brom did or did not provide all of the documentation they are now relying upon. This is not relevant to our case.

There has also been much discussion about Unfair Terms in Consumer Contract Regulations; again this is not relevant to our case.

It has been questioned whether in fact the mortgages issued by West Brom were indeed trackers, this cannot be denied by West Brom as this is the basis they report them to the rating standards agencies – see this link

The agreed level of funds to be deposited into the BARCO account is £1,144 per affected mortgage being represented. For example, somebody wishing to have 10 affected mortgages represented will need to deposit a further £11,440 into the BARCO account. Existing members will receive a refund of unused funds which they paid into the client account of The Law Department. New members will need to pay an additional premium of £356 per mortgage to the Property118 marketing fund to equalise the financial contributions and efforts of the forerunners of the group.

Therefore, the net payment per affected mortgage for members will be:

  • For existing members who have already instructed The Law Department £994 (assuming a refund of £150 per affected mortgage from The Law Department)
  • For new members the total cost per mortgage to be represented will be £1,500

We have created a simple set of instructions explaining how much you need to pay and who you need to pay it to here >>> http://www.property118.com/simplified-payment-instructions-join-west-brom-action/

Remember, if/when we win you will get more than this amount back when you also factor in 100% of the extra 1.9% interest you have been paying which will also be refunded. The worst case scenario is that you will get none of this money back if we lose. If you can live with that you should proceed.

The reason we have chosen this strategy as opposed to buying ATE insurance is that it costs us much less if we win. We are in this to win this. The above strategy means that we all know what we stand to lose and can proceed with our eyes wide open, confident that our liabilities are limited.

If the balance of the BARCO account associated with this action is less than £250,000 by close of business on Friday 28th March 2014 the legal action case will be aborted, funds will be returned to members within 14 days and that will be the end of the line for this campaign for myself and Property118 – at least for 12 months or more anyway. If necessary we will then take another look at Plan B.

UPDATE – 31st March 2014

Since publishing this article our campaign has raised over £450,000 and legal action has now commenced. The official closing date for borrowers to be represented in this action was 28th March 2014. However, it may still be possible to be included in the representative action by paying additional fees to cover administration and Court fees to be added to the list of represented claimants. For further details please Contact Carla Morris-Papps at Cotswold Barristers – telephone 01242 639 454 or email carla@cotswoldbarristers.co.uk



Comments

by Tony Rockn'Roll

8:59 AM, 10th March 2014, About 8 years ago

Reply to the comment left by "ashley " at "06/03/2014 - 12:11":

Following up Ashley's post from last week, it is worth noting for any newcomers that we can at the very least cost West Brom £500 if we complain the Financial Ombudsman and who knows, one day, they might eventually do something. To do this you will need complain to West Brom first.
Would anyone be kind enough to post templates of

1. Letter of Complaint to West Brom
2. Letter to Ombudsman (to send once West Brom reject the complaint)

This follow up letter MUST be sent within 6 months of the rejection of the initial complaint.

by Lucy McKenna

10:59 AM, 10th March 2014, About 8 years ago

Unfortunately, I missed the deadline but I still sent the letter of complaint to the FOS hoping they would at least add it to the pile of complaints.

by Devon Landlords

11:17 AM, 10th March 2014, About 8 years ago

Just written out our cheque for £2288 (2 x mortgages), plus filled in instruction letter, plus photocopied our passports and gas bill, popped in an envelope and about to head off to the Post Office with a spring in my step! Feel so happy to be fighting this together with a great group of people. Every time we look at our bank statement and see the £600 that WBBS have robbed from us every month since last December our blood boils - this cheque for £2288 is less than the extra we have been forced to hand over to them already - what more can we say - come on any fence-sitters, what are you waiting for?! Di 🙂

by Paul Sotheran

11:47 AM, 10th March 2014, About 8 years ago

Cheque for £1144 (1 mortgage) sent last Friday and confirmed received by Cotswold Barristers this morning.

Just hoping those still undecided make the right choice.

by Richard Kent

12:04 PM, 10th March 2014, About 8 years ago

Reply to the comment left by "Tony Rockn'Roll" at "10/03/2014 - 08:59":

Tony,

You Quote.

"It is worth noting for any newcomers that we can at the very least cost West Brom £500 if we complain the Financial Ombudsman"

You will appreciate that WBBS will have factored in FOS payments and the cost of processing complaints into their this rate hike, if not they will most likely impose another hike at some future date to cover these costs.

The more you and this whole issue costs the lender at this stage, the bigger the next hike will be.

Furthermore, you can not win this by attrition, gradual pressure or other strategies other than court action- The only answer is a legal one - Court Action.

Unless there is some unprecedented and unforeseen intervention by the FOS or the Early Day Motion etc. This is what I am hoping for.

by Richard Adams

12:12 PM, 10th March 2014, About 8 years ago

Reply to the comment left by "Richard Kent " at "10/03/2014 - 12:04":

Are you suggesting it is advisable NOT to complain to the FOS? I suspect most of us have already done so way back so cost on WB is already incurred. The post you were commenting upon was about the follow up complaint letter and requested template letter.

At the London meeting we were urged to keep going with the FOS. Sorry if I have misunderstood you but you seem to be advocating otherwise?

by Richard Kent

12:26 PM, 10th March 2014, About 8 years ago

Richard,

What you do is entirely up to you and the campaign, I have no say in that, but my point to Tony is don't imagine the lender will loose financially unless there is some radical action eg....

1. Intervention by FOS
2. Lender reneges on decision for some other reason
3. EDM brings about a change in legislation etc

by Mark Alexander

12:41 PM, 10th March 2014, About 8 years ago

We could hang on forever waiting for the FOS or the politicians.

Those of us who are taking this to Court have decided that enough is enough.

We appreciate that a Court case will immediately stop the FOS and the politicians from taking any further action and we apologise to those sitting on the fence with a strategy of hope, we appreciate that we are scuppering their strategy but so it must be.

The best course of action is to join us. If you think the actions of the West Brom are illegal it is time to put your money where your mouth is, just like so many of us have already done.

Making noise was getting us nowhere!
.

by Richard Kent

12:53 PM, 10th March 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "10/03/2014 - 12:41":

That's right.

Sadly this lender is not going to listen to the noise.

It's better at this stage to 'cough up' a contribution to the campaign than to pin your hopes on the FOS.

by Mark Alexander

12:58 PM, 10th March 2014, About 8 years ago

Reply to the comment left by "Richard Kent " at "10/03/2014 - 12:53":

Indeed Richard - there will be no free rides from this point.
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