Following June’s landmark court case on tracker rates involving West Bromwich Building Society, Skipton Building Society and Bank of Ireland (BoI) will now face legal action from customers.
In June this year, landlords who sued West Bromwich Building Society for raising tracker mortgage rates, when there was no rise in Bank of England base rate, won their Appeal Court battle, which resulted in refunds for 6,000 borrowers.
West Brom consequently had to repay £27.5m of overpaid interest to its customers, which some claim has not only set a precedent for similar legal battles, but has shone a spotlight on how lenders treat interest rates.
Following the ruling of the West Brom matter, the landlord group, Property 118, which launched the successful legal case against the lender, claimed that Skipton, BoI and Manchester Building Society had treated their customers in a similar fashion.
So far, Manchester Building Society has escaped any further enquires, but Property 118 has now set up an Action Group and is using a crowdfunder website to raise funds to enable it to sue other lenders that it believes have acted in a similar way to West Brom.
The group reached its first target of £60,000 last week and has now set a new target of £100,000.
While the group has suspended its plans to take Manchester Building Society to court, due to lack of data and complaints, Property 118 founder, Mark Alexander said:
“We’re going to commence legal action against Skipton and the Bank of Ireland next month, in terms of issuing pre-action protocol letters.”
The first step in a civil claim, the exchange of letters is designed to reveal information and enable the two parties to settle their differences, where possible.
Both Skipton and BoI so far deny Property 118’s claim that the ruling of the West Bromich case is applicable to them.
A spokesman for Skipton said:
“Skipton remains firmly of the opinion that, under the terms and conditions of its mortgage offer, it lawfully had the right to remove the standard variable rate ceiling that applied until 1 March 2010.
“The recent decision of the Court of Appeal in the Alexander v West Bromwich Mortgage Company Ltd case was very fact specific regarding an inconsistency in mortgage documentation. No such inconsistency can exist with Skipton’s documentation because the relevant key terms were very clearly and fairly laid out in only one document, being the mortgage offer.”
A BoI spokeswoman added:
“The West Bromwich case is not com¬parable to Bank of Ireland UK.
“BoI’s offer document and mortgage terms and conditions expressly stipulated that the tracking margin or differential could be varied, and the offer and mortgage conditions documents are consistent, allowing for the differential to be lawfully changed.”