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 Onslow Clough

13:54 PM, 10th March 2014, About 8 years ago

Hi Mark - any idea what the present balance stands at with Cotswold Barristers? With 18 days to go until the deadline for collecting money, I just hope that everyone is doing all they can to get their contribution in to the fund. For anyone who is still doubtful about joining please remember that a lack of action at this stage could cost you many thousands of pounds in the months to come. If we win we could all be getting a very nice windfall around Christmas time...

by Mark Alexander

14:27 PM, 10th March 2014, About 8 years ago

FUNDS UPDATE

Sorry to be a bit later than normal posting today's update. Cotswold Barristers didn't receive any post today but they did on Saturday. Hopefully it was just a case of the Postie being off and no replacement - that's the only logical explanation I can think of.

However, as of Saturday the total stood at £65,208 which represents 57 mortgage accounts.

Hopefully I will be able to communicate a huge delivery of cheques tomorrow and from the comments over the weekend this looks to be extremely likely 🙂
.

by Richard Adams

14:40 PM, 10th March 2014, About 8 years ago

Reply to the comment left by "Mark Alexander" at "10/03/2014 - 12:58":

Thanks. I'll save myself the trouble and the stamp costs and not bother to write again to the FOS.

by Mark Alexander

15:12 PM, 10th March 2014, About 8 years ago

Reply to the comment left by "Richard Adams" at "10/03/2014 - 14:40":

That was my thinking too Richard.

Hopefully the initial complaint will be enough to trigger the £500 fee to West Brom.
.

by The Man From Nowhere

15:29 PM, 10th March 2014, About 8 years ago

To those fence sitters still holding out from joining the legal action in the hope that the Financial Ombudsman Service will assist them, ask yourselves the following question. Why is the West Brom so keen for you to take your grievance to the FOS? In fact, the West Brom in refusing our offer of arbitration clearly stated its preference for affected borrowers to complain the FOS.

http://www.ftadviser.com/2014/03/05/mortgages/west-brom-throws-down-gauntlet-to-btl-borrowers-Y3z3AxA5UGEE5oYUY9CNuO/article.html

The FOS is funded by the financial services sector, e.g. the West Brom, through a combination of statutory levies and case fees. These are paid by financial businesses that are regulated by the Financial Conduct Authority or licensed by the Office of Fair Trading.

Ever hear the expression “Don’t bite the hand that feeds you”?

Even if you do believe in the impartiality or willingness of the FOS, do you seriously believe it possesses the necessary competence, skill, manpower or legal knowledge to adjudicate in your case? Here’s the most likely scenario. After a final rejection of your complaint from the West Brom, you send in your complaint to the FOS. The FOS then sends a copy of your complaint to the West Brom asking whether it accepts your complaint or rejects it with reasons. Those reasons will no doubt feature the “prudently, efficiently and competitively” spiel we’ve already been fed by to justify the rate hike. They may even include extracts from their barrister/QC’s opinion in their response as to why they are entitled to raise the rate similar to the way the Bank of Ireland responded to the Financial Conduct Authority when BoI borrowers complained to the FCA. The FCA simply cut and pasted the BoI QC’s opinion in their response to the borrowers who had complained. It didn’t even bother to seek independent legal advice but instead washed (or should that be whitewashed?) its hands of the whole affair.

So if you want the rate hike decision that affects you reversed, the T&C’s of the mortgage that you signed up to honoured by the West Brom, and the return of your overpayments (with interest), then you need to get your chequebook out and sign up to challenging the West Brom in court.

To those of you who still cling to the vain hope that the FOS or the FCA will come charging to your rescue like some Arthurian knight in shining armour, you need to be aware of the following:

1) Your trust in toothless paper tigers is misplaced.

2) Denial is not a river in Egypt.

3) Just because you're not paranoid doesn't mean they're not out to get you. 😉

by Dean

16:12 PM, 10th March 2014, About 8 years ago

Reply to the comment left by "The Man From Nowhere" at "10/03/2014 - 15:29":

Well said

and 🙂

by Tony Rockn'Roll

16:23 PM, 10th March 2014, About 8 years ago

I'm well aware of the usefulness of the FOS but still think it worth making as much noise as possible. The way I heard it at the meeting was that they were struggling to cope with the volume of complaints and each one costs West Brom £500. X number of MP's in support + Y complaints to the FOS doesn't mean that that West Brom will cave in but it helps with our own marketing and might just make other lenders a little more hesitant.
Anyways, we can X+ Y all we like but it's clear that West Brom won't be doing any blinking until we take them to court which is why we need to subscribe to this action and back Mark Smith.

I've got all my signatures and paperwork signed for 3 mortgages as of today and I'm on board this train all the way to Court Station.

Come on guys - Don't Miss It !!

by Richard Adams

16:51 PM, 10th March 2014, About 8 years ago

Reply to the comment left by "The Man From Nowhere" at "10/03/2014 - 15:29":

Well put argument why it's so wrong not to join the action in hope reg authorities will save the day. You could have added that WB will almost certainly have run their proposed rate hike past the FCA before they sprung it on us and got a thumbs up.

Another reason some borrowers may be holding back is that they believe for some misguided reasons that we won't win. Utterly wrong but a point of view.

And then are there still some affected borrowers who cling to the belief they can freeload to success on the back of our win in court? Again utterly wrong.

Perhaps fence sitters for whatever reason could at least post in the forum why they aren't joining us? Nothing to fear. We won't bite.

by Marshie Cyrus

23:17 PM, 10th March 2014, About 8 years ago

I’ve just sealed my envelope to Mark smith along with payment for my single mortgage. I wanted to do this last week, however being the very organised professional landlord that WBMC consider me to be this has been delayed by my lack of having a working printer!!!!
I have also just put a bottle of Champagne in my fridge so that I can look at it every day until we win and smile!!!!

On another note I had a 30 minute meeting on Friday with my local MP Nick Gibb who is a chartered accountant and has in the past worked for 2 of the major banks. I very openly showed him my paperwork and he seemed genuinely astonished by the term that has been used to justify the rate hike. Unfortunately similar to many other MPs he advised me that he does not sign Edms. However contrary to what has been suggested on forum he seemed to imply that he thinks this issue will get a 90 minute debate in parliament regardless of whether we go to litigation or not. I then gave him a copy of my KFI, the accompanying booklet and a bullet point breakdown of everything that has happened to date as ammunition if he attends such a debate.

by shaun campling

23:27 PM, 10th March 2014, About 8 years ago

today i received confirmation that my cheque for two mortgages sent to mark smith of cotswold barristers has arrived. i can now relax in the knowledge that my corner is being fought in the best possible way. relying on the FOS and FCA is a waste of time. they are as effective as a chocolate fire gaurd, in fact i would hazard a guess that a tangled political web exists between WB the FCA the FOS and the treasury. if you think they will help you your living in cuckoo land. take the bull by the horns and send off your cheque, its your only realistic option. thanks also to justin for his prompt return of unused funds

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