West Bromwich Building Society Tracker Margins Legal Action

This is a breach of:
• Unfair Contracts regulations, which implement EC Directive 93/13/EEC on unfair terms in consumer contracts (the Unfair Contract Terms Directive);
• Financial Conduct Authority treating customers fairly (TCF) Customer Outcomes, particularly:
• Outcome 1: Consumers can be confident that they are dealing with firms where the fair treatment of customers is central to the corporate culture;
• Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale; and in particular
• Outcome 5: Consumers are provided with products that perform as firms have led them to expect, and the associated service is of an acceptable standard and as they have been led to expect.

So where is the FCA - our new financial regulator, whose overarching strategic objective is to "promote and enhance confidence in the UK financial system"? The FCA is also a ‘qualifying body’ under the Unfair Terms in Consumer Contracts Regulations 1999.

Martin Wheatley, the FCA's Chief Executive promised that the new regulator would be a “very different animal”, and we hear relentless rhetoric about "rigorous enforcement" of a "robust" regulatory regime. What a joke.
How can anyone have confidence in the UK financial system when financial institutions arbitrarily change the fundamental characteristics of the products they sell to customers.

Reply to the comment left by "Denise Doms" at "28/09/2013 - 10:45":

Some comments get quarantined for security purposes and will not always appear, however, you can see them if you are logged in as a member which is always recommended. You can also see what comments you have posted via your Member Profile. If you have forgotten your User Name or Password you will find a dropdown in the member section towards the top of the screen, third box along after Latest Articles and Forum 🙂

Also, when you are logged in the security checks are less so the box where you have to type the number and the one you have to tick to say you are not a spammer will not be present when you are logged in.
.

Reply to the comment left by "John T" at "28/09/2013 - 11:57":

The problem with this as I understand it is that BTL mortgages are regarded as commercial contracts rather than consumer contracts so the consumer protection framework does not apply. The challenge therefore has to be on other grounds.

My opinions on some legal points which have come up over the last few days.

1) WBBS seem to think that a person with 3 or more mortgages is not a consumer. To my knowledge there is no definitive legal answer about this.

2) There has been mention of needing to sign the Mortgage conditions booklet. I do not believe that is correct, however, I do believe that fundamental conditions should be made clear in in the offer letter and this opinion comes from the case of OFT vs Foxtons - see http://www.oft.gov.uk/news-and-updates/press/2011/82-11#.UkbDHNKsiM4

For what it's worth, my own WBBS mortgage was a 5 year fix at 4.95% and reverted to bank base plus 2.49% only this year. If we were having a competition on who has suffered most I would probably win! However, I do have a very large property portfolio and I also have a professional background. I am a former MD of a buy to let mortgage brokerage which ranked #38 in The Sunday Times Profit Track 100 in 2008. I read all of the Mortgage Conditions and the right to vary the margin was not clear or obvious to me. Nor was it obvious to my solicitor as he didn't raise it as an issue either! If I missed it and my solicitor missed it what hope is there for anybody else?

Interestingly, at the time I took out the mortgage I would not have considered myself to be a professional investor either. Just like most others here, I was a person who made enough money to buy property for my pension. I wasn't earning a living from my properties at the time, they were just my pension, so why did that make me a professional investor? My income came from other sources.

Now that I have retired, have I all of a sudden become a professional investor or am I a retired mortgage broker who was prudent enough (or stupid enough whichever way you look at it) to buy a lot of properties?

So, what does constitutive a professional investor? I certainly don't belong to a professional body which I had to qualify to be a member of such as the Royal Institution of Chartered Surveyors or the Law Society. My education is the university of life and the school of hard knocks. On the other hand, my solicitor was a member of The Law Society. Everybody who had a WBBS mortgage also had a solicitor. Maybe we should be putting some pressure on our solicitors too? I will be asking mine to fund my stake in the Class Action, just to rattle a few cages, and I will also be advising him to put his professional indemnity insurance company on notice of potential claims. That might just put the cat amongst the pigeons as there are very few professional indemnity insurers and if enough of us complain ....???
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Has anybody asked the West Brom if they can transfer the BTL mortgage to a partner or wife ?

Reply to the comment left by "Mark Alexander" at "28/09/2013 - 13:10":

Would it be cheeky to ask you to share with us a proforma of your letter to your solicitor so that we may benefit from your knowledge and understanding of the issues?
We are probably the least professional or sophisticated and most amateur of your members - having mortgaged our own 2 homes on interest only mortgages to raise the deposits for the BTLs - supposedly to supplement our shattered pensions (both having re-started our lives after messy divorces at 50+)
We both have full time jobs which porvide our incomes and are using any money left over after all property expenses etc to pay back the capital on the one mortgage where we now live together (thankfully we converted that back to a repayment last year) so that at least we will have our own home paid for whenever we can afford to retire

Has anyone affected by this contacted Andrew Tyrie as he was very upset with BOI back in march. Also the eight page letter sent to him by "which" on 28 march, basically shot down all of BOI reasons to increase rates.
I see that WBBS are not offering BTL anymore so it seems that they are trying it on to get rid of you.
I am not personally affected by these two lenders, but do have a portfolio across three other big lenders.

I have spoken to a friend who is a mortgage broker. He says these institutions are getting away with it because they are pleading that if they don't increase the rates that they will go bust. This friend said that the banks should not follow just building societies and the smaller one such as West Brom - has anyone else heard this?

Hi Mark and everyone else on here,

A newbie to this forum, but a seasoned property investor, former property networking host and bridging financier to boot, I come to this forum having been shocked at the audacity and outright discrimination, not to mention dubious legal interpretation, of tracker mortgages that West Brom has granted in the past and now decided to alter on a whim. From 1.39% (in our own cases) plus 2% interest rate hike represents no less than than a whopping 143.88% increase! That's outrageous and scandalous and cannot be allowed to go unchallenged.

What's doubly irritating is the fact that they've 'targeted' multi-propertied landlords, which means that whatever financial problems some of us may already have, they've just added to it; and when one has more than one of these mortgages (we have 3 of this type, with this rapacious lender) then you'll be hit even harder! Quite what West Brom was thinking when targeting landlords with 3 or more properties, is beyond me. As a result, we now have to find and stomp up over £500 extra a month! This is a huge increase and dent in our cash flow; so much so that we face no option but to sell one of the properties in question, and we'll still be worse off, if this comes to pass - and unless we fight them, tooth and nail.

Quite why the media and public at large seem to think landlords as being greedy, unethical beings whom are well off, is so unfair. Rarely do we hear stories of bad tenants; but no, the smearing continues unabated; and I'm sure it's something to do with WBBS's decision to target us, as they're banking on not much support from the public. They wouldn't dare do this to owner occupiers, would they? So why think it's morally acceptable to do the very same thing to landlords, who largely aren't the monsters they like to think we are.

We'll also be forced to raise rents to help with this increase; but can you imagine raising the rent to your tenant by over £160pcm? It'd be deemed unreasonable and totally unacceptable. We wouldn't be allowed! So how come lenders are allowed to do this, unchallenged (as yet!). Okay, so tenants might argue that landlords didn't lower the rent when interest rates fell, but that would miss the point. As with any investment, one expects to take the rough with the smooth; and that means rises in property prices as well as losses when they fall in value. We accept this, BUT 'rent' is to earn and cover the many and various expenses to do with running a property, and while interest rates fell, we had an opportunity to build up reserves a little for things like repairs and modifications to the properties etc. Moreover, many of us re-mortgaged and used the released equity to either purchase more property, or invest into other avenues for the future. This meant that their profit margins reduced, as their monthly payments naturally increased. Some may have wisely factored in future increases, but not anything like this, in one fell swoop - especially when there are an increasing number of rent defaults as tenants suffer employment difficulties; and housing benefit payment changes too.

All these aspects have knock-on effects, on we landlords, as do things like forever rising demands to meet HMO standards and also fire regulations. So while interest rates have been lower, with rising operational cost and increased debt levels, what might have been thought of as landlords making hefty profits, just hasn't been the reality things. So, now that this lender has decided to charge more to landlords such as us, what little profit there was, is now even smaller, or non-existent - or worse negative cash flow!

Knowing how these financial institutions work, and how they can 'legally' lend a multiple of whatever they hold on deposit, this makes me see red, as they effectively decide how much they will lend, and that they profit from this activity at very low cost to themselves; but to add insult to injury, they then, dubiously too, claim out of the blue to need to charge certain borrowers more (where the discrimination comes in - and unethically too) as it's 'prudent' and 'competitive'. What exactly is prudent and competitive about this? It's neither! What planet are they living on?

It's an abuse of power to increase rates as much as this, for one thing; and downright illegal, as they are changing the rules during play, effectively moving the goal posts. This too is unacceptable.

Apologies for the long intro folks, but there's my penny's worth.

I too have been outraged to receive my West Brom letter and do not want to repeat what others have said but have 2 points.

1. There is quite a lot of comment about how many mortgages each person has and this could become divisive ie into those camps who have 1 or 3 or 10 or 20 - I personally think it's irrelevant as if you've had a letter you are in the line of fire and need to stand united with as many as possible to fight it.

2. There are obvious similarities to BoI and WB actions but I think they are worryingly very different. The BoI mortgage offers did have clauses contained in the actual offers - pages 4 and 5 in my two mortgage offers - that said they can change the differential that they charge.

WB mortgage offers do not have these clauses in the offers but apparently in the general terms booklet that I have never seen and I've had my loan with them for 7 years!! If they can get away with this then other lenders will obviously follow and use their own general terms to break the trackers. I've just read a few of the general T and Cs booklet of some of my other loans and am pretty horrified as to what may lie ahead.

I thought the concept that a mortgage offer had to refer to the ability of the lender to vary the margin had already been established with the BoI which is why they had to reverse their decision on around 10% - is this not the case?

I am more than happy to join some kind of class action v WB and would be most grateful if Mark could provide a little more detail as to how this will take place and also offer my thanks for his work to date in trying to unify this action.