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Thousands of homeowners set for big Refunds : 23/01/2010
From The Times
More than 80,000 homeowners in mortgage arrears could receive millions of pounds compensation for unfair charges, an investigation by Times Money has discovered.
Customers of Bradford & Bingley, the Derbyshire and Cheshire building societies and a number of other specialist lenders, such as Kensington and Morgan Stanley, could be due refunds of late-payment fees after a crackdown by the Financial Services Authority (FSA).
The City watchdog recently fined Gmac-RFC, the specialist lender, £2.8 million and forced it to return £7.7 million to borrowers after finding it guilty of treating customers in arrears unfairly between October 2004 and November 2008. The fine was partly due to the £45 a month that the lender levied on borrowers who went into arrears. The FSA said this was “excessive” and did not reflect administration costs.
An investigation by Times Money has discovered that as many as 30 lenders have a similar charging structure to Gmac-RFC, with each levying high monthly fees for arrears.
Gmac-RFC outsourced the administration of its loan book to Homeloan Management (HML), part of the Skipton group, which had a standard model for dealing with customers who were behind in their payments. The outsourcing organisation also processes loans for more than 400,000 other borrowers, including customers of the Derbyshire and Cheshire Building Societies. They, too, would have been subject to the same or similar £45 monthly charge if they had fallen into arrears.
Although HML refuses to publish statistics on arrears, a similar pool of 400,000 loans from Gmac-RFC shows that 20 per cent of borrowers are behind with payments. This suggests that as many as 80,000 customers with loans processed by HML are being charged a monthly fee that the FSA deems unfair.
The ruling against Gmac-RFC means that all borrowers with loans administered by HML and who have gone into arrears since 2004 could be eligible for a refund.
A source close to the situation, who does not want to be identified, says: “It was common practice for lenders to follow each other when it came to charging for arrears. It is a question of when, not if, this will apply to other lenders. It is causing a mighty problem as lenders and HML do not have the staff to look at individuals on a case-by-case basis.”
Neil Warman, the chief commercial and finance officer at HML, says: “We are not able to comment on specific client circumstances but we work closely with a number of lenders, managing their customer mortgage accounts in line with their lending and administration policies.In the event of one of our clients wanting to make a retrospective adjustment to the mortgage accounts we manage for them, then we would work with them to help this to take place effectively.”
The FSA says that it is examining the issue, but industry insiders expect it to fine five more mortgage lenders.
Cerris Tavinor, a spokeswoman for the watchdog, says: “We completed our investigation into Gmac and published the results of that case. We have made the point publicly that we have referred other lenders to enforcement, so other work is carrying on. But we can’t talk about individual firms. If there is evidence that a firm is doing something wrong, then we investigate that firm and take action.
“If borrowers are worried about their situation, they can make formal complaints to that lender. Anyone worried about arrears, getting into arrears and how arrears are being managed can ring our consumer contact service to get more information about the help that is out there.”
With the FSA yet to take action, borrowers can complain to their mortgage adviser, the lender or both, although they must first lodge their complaint directly with the firm deemed to be at fault.
All FSA-regulated firms must acknowledge receipt of a complaint within five days and write back with their conclusion within eight weeks.
If the company fails to write back within eight weeks, or if their conclusions are unsatisfactory, you can lodge your complaint with the Financial Ombudsman Service, a free service set up to settle complaints between consumers and companies that offer financial services. It reviews all sides of the story and makes a judgment, which is usually binding. However, if any party decides to appeal against this decision, the matter is passed on to a senior adjudicator and, if need be, to an ombudsman.
If you disagree with the ombudsman’s decision, you can take the matter to court. At all times it is vital that you keep copies of all correspondence relating to your complaint.
Fahim Antoniades, a broker with Mortgage Centre IFA, says: “If you feel that you have been unfairly treated by your lender, the first starting point is to read carefully the terms and conditions of your mortgage offer.
“If you are not sure what the terms and conditions mean, seek help from the adviser who initially arranged the mortgage. You may feel that the terms and conditions were not explained to you properly, in which case you could lodge a complaint against the advisory firm. However, this could be a separate issue to how the lender itself has treated you. You may feel that a complaint against the lender is also warranted.”
One of the hardest parts is working through the paperwork that may have mounted up. David Hollingworth, of London & Country, a mortgage broker, says: “Debt charities could be invaluable as a first port of call in establishing what action borrowers may be able to take.
“If the property has not yet been repossessed, then clearly the first concern is to avoid the need for such a serious course of action.”
There are useful links on the FSA and the Financial Ombudsman Service websites, as well as free support from your local Citizens Advice Bureau.
DIY PPI for £34.97 : 21/12/09
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Mortgage Protection Holders to Receive Refunds : 8th October 2009
One million homeowners with mortgage payment protection insurance (MPPI) will receive refunds totalling £60 million after the City regulator raised concerns over unfair premium increases and reductions in benefits.
MPPI covers mortgage repayments if the borrower becomes unable to pay because of accident, sickness or unemployment. As unemployment levels have risen sharply this year, policyholders have endured a series of premium increases of between 20 per cent and 100 per cent.
The Financial Services Authority (FSA) raised concerns about MPPI in March and said last night that it had reached agreement with providers to refund increases in premiums and reverse reductions in cover made this year. A deadline of June 30, 2010, has been set for the payment of refunds, which will average £60 and be paid to former as well as existing customers.
The FSA estimates that about 2.1 million borrowers have an MPPI policy, which is usually sold alongside a mortgage. About half of those policyholders will qualify for a refund.
Banks and insurers that sell the insurance will have to offer to reinstate policies if a customer cancelled within two months of an increase in premium or change in cover made this year. The terms must be those that existed before the premiums or benefits were changed. They have also been ordered to freeze premiums and cover for customers for the rest of the year.
MPPI is underwritten and sold by large insurers, which also offer the cover on the high street through banks and building societies or through standalone providers. The protection kicks in from day one, or after 30, 60 or 90 days, and usually lasts for 12 months.
The Post Office came in for particular criticism this year after it reduced dramatically the scope of its Lifestyle Protection product while increasing the monthly premiums. It cut the maximum monthly benefit from £2,500 to £1,500 and extended the waiting period from 30 to 90 days.
Copyright 2009 Times Newspapers Ltd.
FSA unveils new PPI complaints measures : 29 September 2009
The Financial Services Authority has unveiled a range of measures to protect payment protection insurance customers.
The FSA's measures, which have are also supported by the Financial Ombudsman Service, will ensure that all PPI complaints are properly handled and will require firms to re-open around 185,000 previously rejected complaints.
Firms representing more than 40% of face-to-face sales in the Single Premium Unsecured Personal Loan PPI market have agreed to review these sales and redress those consumers identified as mis-sold. Ongoing supervisory action continues with the remainder of this market place.
In addition, the FSA is launching targeted assessment of sales practices for PPI on secured loans and credit cards; if the potential for mis-selling is identified, pro-active reviews by firms may be extended to these areas too.
FSA managing director of retail markets, Jon Pain, said: "Consumers should not be pressured or deceived into buying PPI and they are entitled to have a policy properly explained to them.
"It is unacceptable that despite previous warnings about poor sales practices, backed by 22 enforcement cases and significant fines, the PPI sector still needs the FSA to intervene on this."
He added: "And the outcome of a complaint about a PPI sale should not depend on whether or not the complainant persists past the firm on to the FOS.
"This is the last chance for the industry to show that it can act fairly, consistently and in the best interest of consumers on PPI.
"All firms operating in this sector should take note and where necessary get their house in order. Where we find questionable practices in sales or complaint handling, firms can expect that we will take action."
These measures build on the agreement the FSA obtained from the industry earlier in 2009 to stop selling single premium PPI on unsecured loans.
