Lender refunds repossession expenses charged to customer in part: new GLC legal argument

GLC has settled a court action seeking a refund of a bank's legal expenses levied as the cost of their solicitors raising repossession proceedings against a Scottish homeowner. The action was raised in 2005, and the bulk of legal fees were charged over five years ago.

In Ayr v. BOS plc, the pursuer had contended that on a clear construction of standard condition 12, sch 3, Convenyancing and Feudal Reform (Scotland) Act 1970 and other provisions in that Act, the lender had not been entitled to recoup its legal expenses against its customer because it had failed to serve a pre-litigation 'calling-up notice'.  In light of RBS v. Wilson and others, it ought to have done so.

The case, which was not without additional legal complications, settled extra-judicially for a refund of £600, representing almost half of the lender's costs. GLC will continue to work on how more consumers can secure possible refunds of legal costs, added to their mortgages.

GLC progresses challenge to mortgage arrears charges under Financial Services and Markets Act 2000

GLC has settled litigation against a 'sub-prime' lender in relation to 'administrative charges' imposed when their customers went into arrears of their mortgage. The following charges were applied on a repeat or monthly basis:  ‘Unpaid Direct Debit Fee’ (£25), ‘Arrears Management Fee’ (£50), Late Payment Management Fee (£25), and ‘Litigation Management Fee’ (£115).

Utlising the Financial Services and Markets Act 2000 and other legislation, GLC secured a refund of 75% of the 'administrative charges' imposed historically, a figure of just under £1,000, together with legal expenses. If this was replicated across the current UK 'sub-prime' mortgage book, GLC has estimated around £150m could be refunded to UK consumers; with a similar figure in relation to 'prime' mortgage book.

GLC's Mike Dailly said: "Govan Law Centre has been developing and testing innovative legal arguments as a means to challenge the imposition of unnecessary and unfair mortgage charges where UK consumers are in arrears. We believe the law is on the side of consumers, and we will continue to refine our legal strategy with a view to disseminating free information to empower UK consumers, and facilitate access to justice".

GLC recruitment: new Govanhill Public Legal Education Project

Glasgow's Govan Law Centre (GLC)  requires a newly qualified solicitor with civil court experience. The post is funded for one year and will be based at Govanhill Law Centre's office within Glasgow's Govanhill community. Experience of housing and property factor disputes would be a major advantage.

The successful candidate will lead a dynamic new Public Legal Education (PLE) Project in Govanhill with a focus on empowering local citizens, community groups and residents associations to tackle property factor and landlord and tenant disputes. The PLE project is funded by the Esmée Fairbairn Foundation. The post holder will also undertake some general law centre work in Govanhill, supported by the Glasgow Regeneration Agency, in partnership with Crossroads.

The successful candidate with work with both partners in GLC's professional legal practice.  Applications in writing with C.V. to Principal Solicitor, Govan Law Centre, Orkney Street Enterprise Centre, 18-20 Orkney Street, Glasgow, G51 2BZ.  We will not accept employment agency applications.

The closing date for applications is close of business on Thursday 26 January 2012.  Applications thereafter will not be accepted. GLC aims to be an Equal Opportunities employer.

Decision on 'Pre-action Requirements' in Scottish repossession test cases expected February 2012

The judgment of Sheriff Deutsch in the GLC test cases of RBS plc v. McConnell and Northern Rock (Asset Management) plc v. Millar is expected sometime in February 2012.  These cases test the issue of precisely when compliance with the 'Pre-Action Requirements' from the Applications by Creditors (Pre-Action Requirements) (Scotland) Order 2010 (SSI 2010/317) and Home Owner and Debtor Protection (Scotland) Act 2010 needs to occur, in relation to mortgage arrears repossession actions proceeding on a breach of standard condition 9(1)(a), sch 3 of the Conveyancing and Fedual Reform (Scotland) Act 1970, as amended by the 2010 Act.

Action needed to tackle 'debt farming' of UK consumers in mortgage arrears: launch of Govan Law Centre report

Govan Law Centre (GLC) has found that the average Scottish homeowner in three or more months arrears of their mortgage has £816 added to their account in 'arrears charges' - the bulk of which appear to be unfair in terms of industry regulatory rules - with one fifth of homeowners incurring arrears charges in excess of £2,000. 

As lenders' charging policies apply equally across the country, these figures are likely to be indicative of the general position across the UK. The findings published in a GLC report, entitled 'Debt Farming? - unfair treatment of mortgage customers in arrears by UK lenders', reveal that lenders are continuing to treat mortgage customers in arrears unfairly.

'Sub-prime lenders' continue to be the worst offenders imposing multiple charges most of which are repetitive, unnecessary and excessive. For example some 'sub-prime lenders' can levy some or all of the following charges each month: unpaid direct debit fee £30, arrears fees £45, telemessage fee £25, questionnaire fee £75, referral to solicitors £50, repossession fee, £29.38, litigation management fee £115, and late payment fee £25.

GLC estimate that such charges in current mortgage arrears cases across the UK could represent just under £400m - the bulk of which are arguably unfair and contrary to industry rules. Over the last three years the City regulator, the Financial Services Authority (FSA), has imposed a number of substantial fines on lenders who have failed to treat their mortgage customers in arrears fairly.

GLC is calling upon the regulator to consider requiring both 'sub-prime' and 'prime' lenders to undertake a  review of their active mortgage accounts with a view to voluntarily reimbursing (by way of a credit to the consumer's mortgage account) all of their customers who have been charged unnecessary, unfair, repetitive or excessive charges. To some extent this process is currently happening for the mass misselling of Payment Protection Insurance by authorised firms and financial intermediaries.