GLC challenges excessive mortgage charges

Govan Law Centre (GLC) is raising a number of actions seeking repayment of excessive and unfair fees applied by lenders when homeowners fall into mortgage arrears.

The worst offenders are 'sub-prime' mortgage lenders who typically levy four types of monthly fees: ‘Unpaid Direct Debit Fee’ (£25), ‘Arrears Management Fee’ (£50), Late Payment Management Fee (£25), and ‘Litigation Management Fee’ (£115).

GLC believes these fees do not reflect the actual administrative cost to lenders, and if so, are contrary to legal rules made by the Financial Services Authority (FSA) under the Financial Services and Markets Act 2000. Separately, many of the charges are unfair or excessive to consumers in terms of FSA rules.

Several sub-prime lenders have already been fined by the FSA for failing to treat mortgage customers fairly. In October 2009, GMAC-RFC was fined £2.8m, while in December last year the Kensington Mortgage Company Ltd was fined £1.22m for the unfair treatment of its customers in arrears.

GLC's Principal Solicitor, Mike Dailly said: "Although some lenders have already been fined for excessive mortgage arrears charges, the reality is such charges have simply been added to customers' mortgage accounts. Lenders should voluntarily refund excessive charges, but they won't, which is why GLC hopes to establish a quick route to refunds for our clients".

Bank charges fight still alive: GLC guest comment on MSE

Bank charges reclaiming has largely fallen off the radar after the banks' 2009 Supreme Court victory. But GLC's Mike Dailly thinks the fight is still on. 

In a guest comment piece on MoneySavingExpert.com, Mike argues that last month's High Court defeat of banks on mis-selling payment protection insurance (PPI) may present the catalyst for change that consumers having been waiting for. That case clarified the precise status of the Financial Service Authority's (FSA) rules. 

Consumers may found upon the FSA's new banking rules to argue that overdraft charges are not 'fair' to the individual customer who has to pay them because their price is calculated to cross-subsidise 'free banking' for customers who remain in credit.  They can use them to seek financial redress.  Read Mike's article here.

GLC to launch series of financial services test cases

Govan Law Centre (GLC) will be launching a series of financial services test cases, commencing with a case seeking a refund of legal expenses in a Scottish mortgage repossession case where no calling-up notice was served prior to litigation.

Other cases (with UK wide applicability) will include court actions to recover charges for mortgage arrears management, litigation management and associated charges.

This is in addition to our current unfair UK bank charge litigation (which tests ss.140A and 140B of the Consumer Credit Act 1974 and regulation 5 of the UTCCR on non-price fairness grounds).

GLC would be interested to hear from anyone in Glasgow who has incurred a number of current account overdraft charges during 2010 and/or 2011 with a view to us seeking to recover these for free using new legal research; please contact 0141 440 2503 in strict confidence.

More details to follow in due course.

GLC supports Margo's proposal to cap interest rates in Scotland

Govan Law Centre (GLC) has offered to draft Margo MacDonald's proposed Interest Rate Cap Bill if she is re-elected. Ms MacDonald is reportedly delighted with GLC's support for her proposal to use Scots criminal law to set a cap on interest rates to protect low paid workers and vulnerable consumers in Scotland.

The proposal is in response to the growing prevalence of loans and credit at excessive rates of interest - often several hundred to several thousand percent - all at time when the banks' base interest rate is historically very low: currently 0.5%. The UK removed interest rate caps in 1974, however, consumer interest rates caps are common in Europe and many US states. Excessive interests rate are lawful in the UK.

GLC's Principal Solicitor, Mike Dailly said: "Two and half thousands year ago the Romans capped interest rates at 8.3%, rising to 12% some 355 years later. Usury laws have a long history around the world for good reason: it is unjust and immmoral to exploit people and trap them in a cycle of debt due to excessive interest".

"This is a highly complex area of law and practice - not least because unfair lending can occur with hidden charges and extras, as well as APR rates - but I believe GLC has the trackrecord and expertise in this field to support Margo MacDonald, and work with other civic groups in Scotland, to make this fantastic proposal a reality".