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 The Man From Nowhere

23:07 PM, 11th March 2014, About 8 years ago

Reply to the comment left by "Richard Adams" at "11/03/2014 - 22:42":

Richard, more than likely the West Brom response/actions following a win in court in respect of any unrepresented mortgages would be to the effect of "oh that's nice. See you in court then re: your other mortgages". The West Brom would know that any court decision or settlement would only be of application to those mortgage accounts represented in this current legal challenge.

Money talks. Bullshit walks. The West Brom are not simply going to roll over and lose circa £18 million per annum no matter how nicely a borrowers asks them to (or directs their attention to a court decision), unless a court order forces them to and one which they have no choice but to abide by.

The truth is (and this may be a bitter pill to swallow for those sitting on the fence) that a win for us will only see those mortgages that are represented in this legal challenge enjoying the benefit of a win. If you have several affected West Brom mortgages, but only pay for one, then only that one mortgage will revert back to its original tracker differential for term in the event of a win. The remaining mortgages will remain on the higher interest rate and will be subject to being revised upward (let's face it. It's not going to be revised downward) at the whim of the West Brom.

Everyone who hasn't signed up to the legal action and paid the requisite monies to cover their affected mortgages will simply continue paying the higher interest rate for term or until they remortage (to a less attractive deal than the original one). That should ensure approximately £18 million per annum continues to flow into their coffers. The West Brom (and other lenders) are absolutely, positively, counting on people (I prefer the term "sheeple") to be focused on short term gain over long term loss; to be myopic, miserly, cheap, and crap at maths. It's how the financial services sector makes money. By understanding human nature. They even employ psychologists (in a similar fashion to casinos) to help part you from your hard earned cash.

As for any bad publicity, lenders (and the FCA) take comfort in the fact that people are not elephants. We have short memories. After all, if history has taught us anything, it has taught us that history has taught us nothing.

by Onslow Clough

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

Reply to the comment left by "Richard Adams" at "11/03/2014 - 22:42":

I agree Richard, the FCA will advise caution, but this won't bother lenders. They are all waiting to see what happens in the court case.

If we give up now then it will be open season... come the end of March if we haven't raised enough funds then it is the green light and April, May, June could bring a lot of bad news.

We have to stop this now.... Anyone undecided,,, can you afford not to fight this?

by Richard Adams

23:35 PM, 11th March 2014, About 8 years ago

Reply to the comment left by "The Man From Nowhere" at "11/03/2014 - 23:07":

You are probably right but here we are second guessing re what other lenders/FCA etc might do. The die is cast and what will be will be from now on. Pretty pointless us all speculating any more.

I repeat though my appeal to fence sitters with multiple mortgage a/c's who may genuinely be unable to fund joining the action for them all. Join for 1 or 2 or what you can afford. Will at least solve part of their ongoing problem. Better than nothing.

by Tim Lai

23:42 PM, 11th March 2014, About 8 years ago

Marshall, Mark,

Re: I very openly showed him my paperwork and he seemed genuinely astonished by the term that has been used to justify the rate hike.

It would be helpful to none WB borrowers to see the offending terms, for comparison. Either because other lenders may follow suit, or because other lenders failed to reduce their rates proportionately back in 2008 (using a similar excuse).

Thanks.

Tim

by The Man From Nowhere

0:21 AM, 12th March 2014, About 8 years ago

Reply to the comment left by "Richard Adams" at "11/03/2014 - 23:35":

I agree Richard. Something is better than nothing. If you genuinely cannot afford to include all your West Brom mortgages, include and pay for what you can afford but do explore every (lawful) avenue you can to try and cover each and every affected mortgage. As you say, the die is now cast and what will be will be.

by Sue Clarke

6:33 AM, 12th March 2014, About 8 years ago

It's been a busy time at work, but managed to spend yesterday evening catching up with everything on the chatboard and deinstructing the law society(with thanks for what Justin has done to date). We will get the paperwork together today and send it off with a cheque for our 1 mortgage. We are maths teachers; we can do the maths! There must be more people out there with busy lives who have yet to send off their cheques. Find the time today; it will make you feel better.

by Mark Alexander

7:28 AM, 12th March 2014, About 8 years ago

Reply to the comment left by "Scott Davison" at "11/03/2014 - 21:31":

Good morning Scott

I spoke to a gentleman yesterday who has 11 mortgages with West Brom who has cancelled his DDM and offered to set up a standing order for the payment amount he veleives to be correct.

They have registered the underpayments as arrears with the credit reference agencies and are charging him £40 per month per account in extra fees whilst they are chasing him. He copied me into the correspondence he's been getting and it's getting quite aggressive.

He's selling one of the properties and is hoping to exchange next week. He will then be paying his £15,000 to be part of our action. He didn't previously pay into the fund as he thought/hoped he could deal with the matter himself. He is a solicitor!
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by Mark Alexander

7:45 AM, 12th March 2014, About 8 years ago

Reply to the comment left by "The Man From Nowhere" at "11/03/2014 - 23:07":

Superb post!

Richard - I know who The Man From Nowhere is - we have spoken on several occasions and I have met him once at our campaign members meeting. He is a qualified barrister with several affected mortgages!
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by ian

8:29 AM, 12th March 2014, About 8 years ago

The main concern of this campaign is to stop other banks following suit, if only 5% sign up fight & win, that leaves the bank with 95% of account holders overpaying ? some will go for a no win no fee & the bank will still be left with a high %age, unless all 100% get of then other banks will jump on the band wagon with those odds, its a catch 22 why should a few pay for the many that sit on the fence, this is going to carry on over & over again we may win the fight but still be left waiting to fight again?

by Mark Alexander

9:04 AM, 12th March 2014, About 8 years ago

Reply to the comment left by "ian " at "12/03/2014 - 08:29":

Hi Ian

Do not under-estimate the cost of adverse publicity.

The lenders wont, they had their fill of it and want/need it to end.
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