Fos has been inundated with complaints from customers claiming West Bromwich Mortgage Company unfairly increased the rate on their buy-to-let tracker mortgage.
Search results from the online database of Fos decisions revealed that for the year up until 26 May alone, more than 80 complaints had been made against West Bromwich Mortgage Company, a wholly owned subsidiary of West Bromwich Building Society.
In these cases, complainants alleged the lender had unfairly increased the interest rate by changing the interest rate differential. The complaints have been rejected by Fos.
In January, West Bromwich Mortgage Company won a case in the high court against Mark Alexander in a dispute over the lender’s contractual right to vary the interest rate payable by the borrower and to terminate the mortgage on notice.
This case noted that a letter dated 6 June 2008 – which concerned a loan offer of £90,299 for 25 years – said Mr Alexander would pay a rate of 6.29 per cent until 30 June 2010, when he would pay the Bank of England base rate in addition to a 1.99 per cent premium until the term end.
However a clause in an accompanying document said interest could vary according to changes in the law or market conditions.
Mr Alexander, founder of buy-to-let investor forum Property118, who is waiting to hear whether he will be allowed to appeal the case, said: “It will be interesting if the case goes to appeal.
“If it goes to appeal and is won, it could cause serious embarrassment to Fos, who may have to make a change to its previous decisions.”
Meanwhile, the ombudsman has also ruled in favour of two consumers who claimed Northern Rock Asset Management caused them loss because of the way it dealt with their mortgaged buy-to-let property after they fell into arrears.
Arrears developed on the mortgage from 2008, and in August 2009 NRAM obtained a court order for possession of the property – by which point the arrears were approximately £11,000.
Ombudsman Tony Stafford found NRAM took no steps to obtain income from one of the flats in the property for approximately 18 months, when doing so would have reduced the mortgage balance.
NRAM has been ordered to pay a third of the interest which accrued on the pair’s mortgage arrears between April 2010 and the time it was redeemed.
Right to reply
A West Bromwich Building Society spokesman said: “Adjudications to date reinforce what the society has maintained since first announcing the change in interest rates – that we are acting entirely within the terms and conditions of these buy-to-let mortgages.”
A spokesman for NRAM, which is part of UK Asset Resolution, said: “UKAR is committed to acting in full accordance with the law and to treating customers and taxpayers fairly. We take any complaint seriously and endeavour to work with all relevant parties to achieve a mutually agreeable solution, and where we have made a mistake we will put it right.
“In this case, it should be noted that the Financial Ombudsman Service upheld part of this complaint.”
| Case Study |
One ombudsman case from 23 February concerned an individual referred to as Mr T who had taken out 22 buy-to-let mortgage with West Bromwich. The interest rate reverted to a rate that tracked the Bank of England base rate by an interest rate differential or margin. In 2013 West Bromwich wrote to Mr T to tell him that it was increasing the interest rate differential on his buy-to-let mortgages, citing a change in market conditions. Mr T’s argument included the points that West Bromwich should not be able to pass on to him the costs for poor management, that other lenders in similar positions had not increased their rates, and that the reference to its terms and conditions was selective and misleading. However, ombudsman Jan O’Leary found that the lender’s standard conditions of offer were not inconsistent with its mortgage offers, and that on balance the lender’s actions were reasonable. Source: Fos |
