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 Mark Alexander

9:45 AM, 5th March 2014, About 8 years ago

Reply to the comment left by "ashley " at "05/03/2014 - 09:26":

The FT Adviser article makes for very interesting reading indeed, in particular the response from West Brom.

It is quite clear to me that they are hoping to derail the fundraising by continuing to suggest that complaints are made to the Financial Ombudsman Service.

It is nearly a year since the FOS was flooded with complaints relating to the Bank of Ireland rate rise and the organisation is still prevaricating. Many members of our action group have referred to the FOS as "toothless paper tigers" and now wish to take control of the situation and let the Courts decide. The group has far more confidence in a Judge seeing past the smoke and mirrors strategies of the West Brom than they do of the FOS.

We are confident that we will raise the funds and have our day in Court. Our win will benefit everybody with a tracker rate mortgage for which there are believed to be around 2.5 million in the UK. However, only those people who pay to be represented by our action are likely to benefit directly and immediately if we win. Others will benefit from any case law which is created but their own legal action, even if it is on a follow up no-win-no-fee basis is likely to take a lot longer to resolve and end up costing them significantly more money.
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by Mark Alexander

10:36 AM, 5th March 2014, About 8 years ago

I am pleased to report that the cheques have started to arrive at Cotswold Barristers.

You will receive a receipt by email on the day your cheque is received.

Cheques that have arrived today are for a total value of £14,872 which is great for day one.

Thank you to all the early birds and let's hope there are lots more tomorrow 🙂

The faster the fund grows, the more people will be encouraged so please send your cheques and instructions ASAP please.
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by MM London

10:40 AM, 5th March 2014, About 8 years ago

I will be putting my cheque in the post for 2 mortgages upon my return from abroad later this week.

by Mike L

12:03 PM, 5th March 2014, About 8 years ago

I don't know if this is just a timing coincidence but I've had a very supportive letter form Justine Greening MP yesterday. She confirmed that as a Minister she was unable to sign the EDM, but that she has asked Sajid Javid MP for an update. All good stuff!

by Mark Alexander

14:03 PM, 5th March 2014, About 8 years ago

House of Commons - Early Day Motion EDM976 now has 50 MP's supporting.

For those who are new to the forum EDM976 reads as follows

CONDUCT OF MORTGAGE LENDERS

That this House condemns mortgage lenders breaching tracker rate mortgage contracts by unilaterally increasing the margin they charge over the Bank of England base rate in order to increase their profit margins and deliberately targeting borrowers where consumer protection law is ambiguous; and calls on the Government to investigate the alleged associated recent activities of the Bank of Ireland and West Bromwich Building Society.

See >>> http://www.parliament.uk/edm/2013-14/976
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by Seething Landlord

14:39 PM, 5th March 2014, About 8 years ago

Is the original thread still accessible? The links seem to take me straight to the new thread which does not give much information for anyone who has not been following developments.

by Mark Alexander

14:48 PM, 5th March 2014, About 8 years ago

Reply to the comment left by "Seething Landlord" at "05/03/2014 - 14:39":

For the time-being we have redirected the old thread to this new one. This is to avoid confusion for people who are looking for the website and just want to sign up.

It's not ideal but as a short term solution it solves more short term problems than it creates.
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by ashley nissim

15:21 PM, 5th March 2014, About 8 years ago

It's fantastic to see so many people signing up.

There must be lots of people that have questions to ask, so feel free to ask away. There are always plenty of people happy to answer any questions.

We are all investors & this investment could save us all a substantial amount of money in the short to medium term.

Many people are entering this fight because they believe in the principle that West Brom should not be allowed to get away with this. I cannot argue with that.

However, I look at this purely as an investor. I want my money to earn as much as it can. Winning this fight will save me thousands of pounds on just one mortgage each year. I cannot think of an investment that I have ever made which could give me such a good yield.

I can either leave my £1144.00 in the bank earning a tiny amount of interest, or invest it in making my property earn more money.

If an Estate Agent told me that I could get an extra £2000 rent each year by spending £1144 on decorating, I would call the decorators. For me, this is no different.

by Highland Lass

15:22 PM, 5th March 2014, About 8 years ago

Cheque for one mortgage is now winging its way to Mark Smith.

Job Done!

Feeling Great!

Roll on the Court Case and Success, just in time for Christmas will be fine.

by Onslow Clough

15:56 PM, 5th March 2014, About 8 years ago

Am I right in saying that if we get 250 people signing up at £1000 per mortgage (£1500 if you are new to the fight) that will be about £250,000 in the pot for the legal battle. So if there are 500 people signing up, our individual liability for costs will drop to about £500 each, and if there are 1000 people who sign up, then it brings it down to about £250 each? Therefore it is easy to see that the more people that join, the better for everyone (and we will get back any over-payment at the end). Is that correct?

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