GLC campaign for lenders to reimburse unfair mortgage fees in Scotland

Banks are facing compensation claims of up to £30m from Scottish mortgage customers hit by "unfair, immoral and unethical' fees and charges added to their mortgages after court actions were dismissed by lenders for technical reasons. Govan Law Centre's (GLC) campaign to stop Scottish consumers being 'double charged' for mortgage expenses has been reported in The Herald (Sat, 29 December 2012).

GLC believes that the issue here is fairness, and that incompetent or defective proceedings cannot be the fault of consumers; rather it is the responsibility of lenders and their Scottish solicitors. GLC considers it to be unfair, immoral, and unethical for Scottish solicitors and UK lenders to profit twice by 'double-charging' Scottish consumers who are in financial difficulties.

GLC has set up a simple self-help website for affected customers or their advisors to seek free refunds.

The Council of Mortgage Lenders told The Herald that if costs were not added to mortgage accounts "then all customers would effectively end up paying for them, which many would regard as unfair and inappropriate". The Herald's own editorial has argued that this approach "fails to recognise the only fair and appropriate way for the charge to be borne is by the institutions whose incompetence caused the actions to fail". The Herald goes on to argue that:

"Mike Dailly of Govan Law Centre, the solicitor who is leading the campaign to recover the charges levied for failed actions, is entirely justified in condemning the lenders and criticising their solicitors as "unfair, immoral, and unethical" in double-charging Scottish consumers who are in financial difficulties".

Repossession cases which were dismissed in Scotland centre on two significant legal rulings in the UK Supreme Court and the sheriff court that resulted in thousands of repossession cases being aborted: RBS v. Wilson; and NRAM v. Millar & RBS v. McConnell, respectively (GLC represented the defenders in NRAM v. Millar and RBS v. McConnell). 

A fair and level playing field?

When a Government Minister fights an election, he or she does not do so on Government time, with paid civil servants producing campaign materials. Likewise, if the Scottish Government were to hold a referendum on independence, they would campaign not as Ministers, but as members of their political party. They would not be permitted to use civil servants to produce campaign materials or use their Office to run a campaign. Such referenda are subject to campaign rules.

For example, in 'Scotland's Future' the Scottish Government explain why their proposed referendum would need to be subject to campaign rules: "it is essential that rules are in place to ensure that the campaigns are run in a demonstrably fair and open manner ... The aim is to create a level playing field for those involved in campaigning; no organisation should have an unfair advantage over another. In particular, a single wealthy organisation should not be able to influence the campaign disproportionately".

But incredibly there are no such campaign rules for Law Society of Scotland referenda. Which explains why the President, Council members, and the Chief Executive Officer can help themselves to resources - paid for by the members - such as staff time, organisational facilities, confidential databases, and Law Society financial resources to run their own campaign in favour of 'Tesco Law', and the Legal Services (Scotland) Bill.

Does that give them 'an unfair advantage'? You betcha. Have they been prepared to offer the same resources to Scottish solicitors who have concerns over aspects of the Legal Services (Scotland) Bill? No, because they want to win at all costs. It's their game, their rules, and if you don't like it, it's their ball too. This is a very sad indictment on Law Society President, Ian Smart, who is ultimately responsible for this undemocratic process.

GLC's Principal Solicitor's call for Mr Smart to resign is reported in today's The Scotsman here, and concerns over the lack of fairness in next week's SGM is reported in today's The Herald here.

Complaints upheld by FOS doubles in two years

The Herald reports that the proportion of complaints upheld in favour of consumers by the UK Financial Ombudsman Service (FOS) has doubled in the past two years.

FOS upheld 61% of banking-related complaints, 41% of mortgage complaints, 70% of general insurance complaints and 42% of investment-related complaints. Five banking groups accounted for 38,286 cases – over half of all the new complaints received by the ombudsman during this six-month period.

The British Bankers Association (BBA) response to this data was to immediately claim this was a great success as this translated to "less than one upheld complaint for every 10,000 products you can get from your bank".

Of course this may provide little comfort to the 38,286 bank customers who complained to the FOS in the last six months; and if FOS is upholding 61% of these complaints, this is compelling evidence that the banks' complaint handling systems are wholly inadequate and in need of reform.

Clearly, the FOS is providing a practical remedy to UK consumers with financial disputes, and if you want information on how to complain to the FOS please visit here. Although, for a critical 'insiders' take on problems with the FOS see here.

Rebel Lawyer: Herald business profile

Simon Bain's profile of GLC's Principal Solicitor in The Herald's Saturday Business Section: 'Mike Dailly is not your typical successful lawyer. He speaks his mind, exudes enthusiasm, earns a very modest salary, and annoys bankers, bureaucrats and politicians'. The full article from The Herald is online here.

Halifax Bank of Scotland new charges 'don't add' up

The Herald reports that HBOS' new charging structure - in force from tomorrow - will cause serious problems for many customers. Being overdrawn for HBOS customers by up to £2,500 will cost £1 a day, and for more than £2,500 it is £2 a day. For unauthorised overdrafts, it will be £5 a day – with no monthly cap.

More than 50% of the UK population use their overdraft facility on a regular basis, and choosing the wrong facility could cost unwitting borrowers hundreds of pounds a year, according to moneysupermarket.com.

Its research suggests that 17% of us are permanently overdrawn and 13% use an overdraft more than six times a year. For these customers, an agreed overdraft with no charge except interest rates is likely to be a much better option than the new “simple” daily fees.

GLC's Principal Solicitor said: “The bank says it’s simple – it is, but ultimately the problem is it will only benefit those customers who can bring down their overdraft within a couple of days. If you can bring it down quickly it isn’t going to cost you very much, but the vast amount of people who go into overdrafts and unauthorised overdrafts are in financial difficulties. The reason for that is if you have either lost your job or your partner has, or you have lost your overtime, or you have got ill, and you are in a bit of a sticky position or have fallen on hard times, in that situation you are not in a position to find a lump sum of money to bring yourself back into the black.”

The full story is in today's The Herald here.