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.

Time to tackle shark practices of debt companies and their Scottish solicitors says GLC

Govan Law Centre (GLC) is concerned that the OFT's Debt Collection Guidance is being routinely ignored in Scotland not only by UK debt purchasing companies but more worryingly by certain firms of Scottish solicitors who undertake debt collection as one of the primary activities of business. 

Besides causing unnecessary human misery, unfair, oppressive, and disproportionate business practices are resulting in vulnerable Scottish homeowners being threatened with homelessness as creditors use inhibitions for tiny debts. The practice results in creditors being able to scupper Scottish Government mortgage to rent transactions, where families facing homelessness can have their house purchased by a social landlord. 

Although, the OFT expects solicitors firms who undertake debt collection work as one of their primary activities of business to obtain a 'Category F' consumer credit licence, most Scottish debt collection firms of solicitors operate under the Law Society of Scotland's 'group consumer credit licence'.  GLC believes this results in a lack of effective regulation of Scottish law firms undertaking debt collection work because the Law Society of Scotland does not specifically regulate such work, and therefore, this work appears to be largely unregulated in practice.

GLC's Mike Dailly said:

"To give an illustration of the problem, we have a case in Glasgow where it has taken us many months to defend a repossession action and broker a complex mortgage to rent transaction, which is now being thwarted by a Scottish firm of solicitors acting on behalf of an English debt purchasing company for a debt of £810.  Last month the company was prepared to accept repayment at £5 per week, but since obtaining an inhibition it wants all of the money as a lump sum".

"Our client is on incapacity benefit and has offered £100 plus £5 per week but the company's solicitors advise their client says no. We believe this Scottish law firm and company have engaged in aggressive, oppressive, and unfair practices contrary to the OFT's expected standards for consumer debt recovery, and contrary to section 25 of the 1974 Consumer Credit Act".

"Govan Law Centre is considering all legal remedies available to our clients against such companies and their Scottish solicitors - including where appropriate 'naming and shaming' - however, it is quite clear there is a major regulatory role here for the Law Society of Scotland which needs to be addressed, a need for the OFT to intervene, and ultimately a pressing need for the Scottish Government to review the ability of their own Mortgage to Rent scheme to be de-railed by unsecured creditors with relatively tiny debts through the inappropriate use of inhibitions".

Move to end time bar for abuse victims

The Herald reports that Scots lawyers have called for a change in legislation north of the Border to make it easier for abuse victims to claim compensation. The move comes after an English High Court ruling opened the door to people who suffered at the hands of priests to sue the wider Catholic Church as vicariously liable in tort (delict in Scotland) and not just the individual.

While the ruling in England is not binding in Scotland, human rights lawyers Mike Dailly, of Govan Law Centre, and John Scott, of Capital Defence Lawyers, say it is a significant step that would offer a “persuasive” precedent in the argument if such cases are now raised in Scotland.

Currently actions relating to personal injuries have to be brought within three years, or in the case of children within three years of turning 16, unless certain exceptions apply or the claimant can persuade the court that it would be equitable to disapply the time bar. A Scottish Parliamentary committee will shortly examine a Scottish Government proposal to extend the time bar to five years, but campaigners say this does not go far enough.

GLC's Mike Dailly said: “Very often the nature of sexual abuse is such that many vulnerable people cannot even speak of it until after the time bar has elapsed. The Scottish Government has so far refused to change the law here, but it cannot be right that a victim of sexual abuse in Scotland should be denied access to justice due to a technical time bar rule – justice demands change here.”

Public consultation on Property Factors (Scotland) Act 'Code of Conduct'

The Scottish Government has launched 12-week consultation on a proposed statutory Code of Conduct, to be made under the Property Factors (Scotland) Act 2011, which was passed by the Scottish Parliament earlier this year.

Property managers administer communal areas, roofs and stairwells in an estimated 225,000 flats and tenements across Scotland. Land maintenance companies look after the common green space on many new housing estates. The act, which comes into force no later than October 1, 2012, aims to provide protection for homeowners in Scotland who receive services from property factors.

Compulsory registration for all property factors and a tribunal based dispute resolution process for homeowners will be introduced.

Minister for Housing and Transport, Keith Brown said: "Property managers have an important role to play in maintaining and improving housing stock condition and open space. While the majority of property factors provide a good, effective service, the Scottish Parliament voiced concerns about how some property and land management services are delivered".

"The act will provide protection for homeowners in Scotland who receive services and the code of conduct is a central element of that act. “I would urge everyone with an interest in this important issue to respond to the consultation.”

During the consultation period the Scottish Government will hold a series of consultation workshops for property factors and for homeowners and members of the public. The act was introduced as a member’s bill drafted by GLC on behalf of Glasgow MSP, Patricia Ferguson. The Scottish Government supported the bill and worked with Ms Ferguson to make the legislation as effective as possible.

The consultation will run from Monday 26 September until Friday 16 December.

GLC's Principal Solicitor wins Solicitor of the Year

This years Solicitor of the Year award has been given to Govan Law Centre's Mike Dailly at a gathering at the Hilton in Glasgow last week.

The prestigious award was determined by an independent panel of Scottish judges, chaired by former Secretary of State for Defence, the Rt Hon Lord Browne.  Mike is now the only solicitor to have won the award twice, having previously won in 2007.

The award for Legal Personality of the Year was given to Maggie Scott QC and Legal Academic of the Year went to the late Elaine Tyre. The 2011 Lifetime Achievement Award was given to Lord Rodger of Earlsferry who sadly passed away earlier this year.

Heather goes to Holyrood

Heather MacKay

Govan Law Centre solicitor, Heather Mackay, has commenced a three month personal sabbatical to take part in an internship programme with the Scottish Liberal Democrats in Edinburgh.

During her internship, Heather will gain experience working in the Scottish political process and will have the opportunity to further understand the system of law-making in Scotland. Heather will be spending time in Holyrood and local parliamentary constituency offices.

Heather said: "This is a fantastic opportunity and I am extremely excited to be able to take part in the internship programme. I am looking forward to putting the skills and experiences I acquire to good use upon my return to Govan Law Centre in December.". 

Recruitment: Temporary position for qualified solicitor at GLC

GLC has a vacancy for a solicitor qualified in Scots law on a temporary basis. Applications by letter and CV should be addressed to the Principal Solicitor, Govan Law Centre, 18-20 Orkney Street, Glasgow, G51 2BZ. The closing date for applications is Friday, 2 September 2011.

Former Deputy Editor of The Sunday Post appointed by Govan Law Centre

Govan Law Centre has appointed Colin Grant, the former Deputy Editor of The Sunday Post, as its media consultant, advising on, and handling, a wide range of media, communication and public relation projects for GLC. Colin is currently the Director of Spectrum PR.

Among Colin's many achievements at DC Thomson was the establishment of the award-winning CHAS (Children’s Hospice Association Scotland) campaign, which Colin ran single-handedly for four years from 2001-2005. During that period The Sunday Post raised a record £4 million which helped build and run Scotland’s second children’s hospice, Robin House, near Loch Lomond. In addition, Colin created the highly-successful Scottish Curry Awards.

GLC's Principal Solicitor, Mike Dailly said: "We are delighted to welcome Colin Grant to Govan Law Centre as our media consultant.  Colin is an outstanding journalist with a first class track record and Govan Law Centre's Board of Trustees is confident he will make a major contribution to our work".

GLC launches new 'Schools Trust' for Govan kids and invites grant applications from schools

Govan Coat of Arms with motto 'Nihili
Sine Labore' (Nothing Without Work)

GLC has today launched a new charity called the 'Govan Law Centre Schools Trust' (Scottish charity number SCO42451), with the objective of promoting the advancement of education by making small grants to schools in the Greater Govan area of Glasgow.

Fundraising has already been undertaken by GLC to enable the first round of grants to be made by the end of October 2011.  Headteachers of local primary and secondary schools in the Greater Govan area have today been sent a letter inviting them to make an application for a grant(s) by 22 September 2011.

Individual grants are unlikely to be awarded in excess of £250. There is no formal application form and no additional prescriptive rules as the GLC Schools Trust believe that local schools will be in the best position to know what would be a good use of grant funding.

GLC backs Scottish Government's position on RBS plc v. Wilson

Govan Law Centre (GLC) supports and welcomes the Scottish Government's decision to take no legislative action in light of the UK Supreme Court's decision in RBS plc v. Wilson and others as the 'right thing to do' in the circumstances. 

While the majority of consultees alleged that the implications of this case would be negative, GLC believes there is no empirical evidence to back up such assertions, and that the Scottish Government was correct to advocate no law reform response, particulary so in the current climate of forebearance and difficult economic circumstances.

GLC's Principal Solicitor, Mike Dailly said: "Calling-up notices are the equivalent of 'default notices' for consumer credit debts and they serve a useful purpose in enabling the debtor to address problems before litigation can be raised. The only difference with a mortgage is the fact it is secured on heritable property and it is therefore entirely consistent to support the requirement for lenders to serve calling-up notices prior to entitlement to raise litigation. It is in the interests of both parties, lender and borrower".

"It is also instructive to note that some lenders and their solicitors did generally serve calling-up notices and did so as a matter of good practice without any difficulty".

"GLC rejects the Council of Mortgage Lenders (CML) assertion that the Wilson decision may not be in the 'best interests' of borrowers. For those with no prospects of retaining ownership or occupancy of their homes a calling-up notice can act as a spur to selling their property with or without their lenders assistance, and for those that need more flexibility to pay their debts the calling-up notice acts as a spur to take advice to set up a repayment solution which the lender would have to explore in any event in terms of the Pre-Action Requirements'.

"What the CML calls 'delay' is in fact a sensible and reasonable opportunity for practical solutions to be brokered and found to enable the mortgage to be paid, arrears cleared and homeowners to retain their homes. GLC is pleased the Scottish Government has acted to safeguard the rights of vulnerable homeowners in Scotland".

Solicitor of the Year nominee for GLC

Govan Law Centre's Principal Solicitor, Mike Dailly, has been shortlisted for the Solicitor of the Year Award at the Law Awards of Scotland 2011.

The nominees were announced last night at a reception held at 29 Royal Exchange Square in Glasgow. There were three solicitors in total who made the short leet in the category of Solicitor of the Year.

Mike previously won this prestigious award in 2007. The 2011 winner will be announced at an awards dinner in Glasgow's Hilton Hotel on 8 September 2011.

Risk of homelessness to private tenants from Scottish housing associations' debt recovery practice

GHA's CEO, Martin Armstrong

Govan Law Centre (GLC) has raised concern over the growing practice of Scottish housing associations using 'arrestments in execution' against private sector tenants in relation to debts owed by their landlords to housing associations, generally in the association's capacity as a property factor.

GLC believes this policy will force private sector tenants to incur rent arrears, exposing them to eviction, the risk of homelessness and unnecessary detriment. Housing association officers typically refer to such arrestments as 'rent arrestments' and use them every month or four weeks, repeatedly, against individual 'innocent' private sector tenants.

GLC's Principal Solicitor has today written to Martin Armstrong, CEO of the Glasgow Housing Association (GHA) to express the law centre's concern that this policy is disproportionate, regressive, and ultimately puts innocent private sector tenants through unnecessary detriment, with the risk of homelessness. Other housing association landlords in Glasgow are using this practice against private tenants, and GLC believes the Scottish Government should intervene to examine the practice and consequences of this policy.

Lindsay Paterson, Solicitor with Govanhill Law Centre said: "We believe this policy causes unnecessary cyclical monthly detriment to innocent private sector tenants, and exposes them to unnecessary potential fines and emotional distress".

"It can be a frightening experience for our clients to have sheriff officers come to their door to serve such documents on a regular basis, and in our experience the service of schedules of arrestment is causing significant distress and inconvenience to ‘innocent’ private sector tenants".

"We hope the GHA and other social landlords will reconsider their policies here and stop using this form of diligence against 'innoncent' private sector tenants".

Law centre opposes closure of Glasgow's Bilingual Support Unit following 'flawed' consultation process

Govanhill Law Centre (GhLC) has opposed the proposed closure of Glasgow's Bilingual Support Unit (BSU), presently positioned in Shawlands, between Govanhill and East Pollokshields, two of the most ethnically diverse communities in the City. Its opposition is supported by GLC.

Responding to a Glasgow City Council consultation, GhLC says that in its experience there are severe barriers to education and employment for Roma families in Glasgow. A saving of £186,000 from closing the BSU would represent very poor value in relation to the significant benefits gained from specialist language provision to youngsters in Glasgow's education system, youngsters who often have the lowest educational and employment prospects.

The law centre has identified five key flaws in the current proposed closure process:

(1) No educational benefits evidenced
(2) Financial savings alone seem to be driving force
(3) Flawed consultation process
(4) Failure to meet with needs of children with little or no English
(5) Failure to meet needs of Roma children

With respect to the need to undertake a proper consultation at a meeting on June 9th, 2011, GCC's Director of Education, Maureen McKenna said “this is not a statutory consultation so it is not a public consultation.  It is good practice for service reform”.  However, GhLC believes that GCC has failed to have 'due regard' to its statutory duties under the Equalities Act 2010. 

GhLC Associate Solicitor Lorraine Barrie said: "Glasgow City Council’s public sector duty under the Equality Act 2010 states that an Equality Impact Assessment document should be produced, containing sufficient information to show it has paid ‘due regard’ to equality duties in its decision making. In that regard, we have referred the Council to the recent case of R (W) v. Birmingham City Council [2011] EWHC 1147 where the High Court found that ‘where a decision may affect large numbers of vulnerable people … the due regard necessary is very high’ (at para 151). We believe that is the case here. Further, the court held that ‘consideration of the duty must be an integral part of the formulation of a proposed policy …’.

The Equality and Human Rights Commission’s guide for decision makers states “whether it is proportionate for an authority to conduct an assessment of a financial decision depends on its relevance to the authority’s particular function and its likely impact”. We would argue that as the proposal is likely to have a significantly adverse impact on the learning of all of the pupils who attend the BSU and future pupils, we believe the ‘due regard’ duty is very high, and accordingly GCC are required to carry out an equality impact assessment.

The only mention in the document of the Equality Act 2010 is as follows: “The proposed Service reconfiguration supports the Council’s responsibilities under the Education (Additional Support for Learning) Scotland Act 2004 (Amended 2009) and the Equality Act 2010”. This bald statement in our view, completely fails to demonstrate whether GCC have given “due regard” to their legal duties to equalities; particularly where the due regard duty is ‘very high’

We would hope GCC will produce an Equality Impact Assessment, and make its consultation public, otherwise it may render itself vulnerable to legal challenge under the 2010 Act".

Govanhill Law Centre's full consultation response is here (opens as PDF).

GLC challenge proposed care package cull for severely disabled Glaswegians

GLC has written to Glasgow City Council's (GCC) Director of Social Care challenging the legality of plans to cut funding by up to 40% for care packages for adults with profound learning disabilities, often requiring 24/7 'one to one' care services in the City. 

The proposals follow GCC's adoption of a 'Self Directed Support' (SDS) funding system whereby clients can take charge of their own funding to ensure a more personalised, choice-based service.  However, Govan Law Centre is concerned that the new SDS system is being used to mask an irrational funding cull for some of the most vulnerable adults and children in Glasgow.

The new system is being introduced in phases; the current first phase affecting 1,800 adults with learning disabilities in the City, with future groups including children with learning disabilities and those with mental health disabilities.

GLC's Principal Solicitor, Mike Dailly said: "Govan Law Centre has identified a number of apparent major legal flaws in the new SDS system and its imposition to vulnerable persons via a 'review' of their care needs. We believe the Council needs to urgently rethink its entire process here, and in the interim continue existing funding packages. Otherwise, we believe the Council will be vulnerable to challenges by way of judicial review."

"There is also a fundamental human rights issue at stake with this care package cull: a 40% cut to care services to severely disabled persons who may be unable to communicate or undertake basic tasks, translates into placing human beings at high risk of self-harm, pain, suffering, and ultimately death, due to the fact, for example, no-one will be watching them during the night if they start choking or self-harming. Why would any Scottish public body want to do this?".

Christie Commission Report: GLC says hundreds of millions of pounds could be saved by earlier, co-ordinated, intervention in homeless prevention

Govan Law Centre (GLC) has welcomed the Christie Commission’s emphasis on the need to prioritise preventative spending to tackle the root causes of social problems, and believes that if its innovative earlier prevention of homelessness systems were rolled out across Scotland, hundreds of millions of pounds of public money could be saved each year.

GLC’s prevention of homelessness senior coordinator, Alistair Sharp said: “At the moment our innovative earlier prevention of homelessness systems have a 84% success rate, resulting in a potential saving of £48m per annum if rolled out across the City of Glasgow – or potentially several hundreds of millions of pounds per annum if replicated across Scotland”.*

“We are further developing and progressing prevention and partnership through a new innovative process of early intervention with our partners. This will allow us to provide services at a much earlier stage to protect people in their tenancy’s and owner occupancy by providing legal advice and representation, money and benefits service and access to other targeted support from the voluntary sector and social work services teams.”

GLC's Principal Solicitor, Mike Dailly said: "Govan Law Centre would like to see an amendment to the Homelessness etc., (Scotland) Act 2003 to require all local authorities in Scotland to provide a co-ordinated earlier intervention prevention of homelessness system. We have seen the impact and success that such an approach can have in the Southside of Glasgow, and there is no reason that such an approach could not be delivered across Scotland".

The Christie Commission reports that as much as 40% of all spending on public services is spent on social problems which could have been prevented in the first place and by ‘prioritising a preventative approach’ and developing ‘a radical, new collaborative culture’ with the public and voluntary and private sectors working in partnership could cut demand and ‘big bills’ in health, social care and justice.

Govan Law Centre’s Prevention of Homelessness Partnership is made up of Govan Law Centre, Money Matters Money Advice Centre and Glasgow South West Social Work Services and in 2010 won the Scottish Social Services Accolade for Partnership Working in Adult Social Care. The Prevention of Homelessness Partnership project has prevented over 2,000 people and their families from homelessness since it began in 2005. Successful in both creating a collaborative culture through its multi disciplinary/agency partnership approach and by making prevention paramount for homelessness prevention in Glasgow South West.

We have already proven the impact of cost reduction to the public purse as reported in an independent evaluation of the Prevention of Homelessness Partnership project (2009). By preventing over 2,000 people and their families from eviction, repossession and homelessness the cost savings to the public purse can be calculated in terms of: the estimated economic costs of eviction and of a typical homelessness case being £23,074, (it can be as high as £83,000 for the most complex case); the cost of each case to local authorities and the housing provider is £15,000. (SCSH briefing Tenancy Failure and How Much it Costs & Crisis: How Many How Much). This shows that massive cost savings are achievable.

* Our estimate is based on our previous 84% success rate in preventing homelessness in relation to Glasgow City Council section 11 notification data (providing the number of cases taken to court for eviction and repossession in Glasgow – in 2010/11 (12 month period) there were 2,485 section 11 notices in Glasgow alone); utilising an average figure for the cost to the taxpayer for providing a range of housing, social work support and health service costs per household in the sum of £23,074 (COSLA Prevention of Homelessness Guidance, 2009).

GLC welcomes FSA intervention to prevent 'double charging' to Scottish homeowners threatened with repossession

Govan Law Centre (GLC) has welcomed the intervention of the Financial Services Authority (FSA) to prevent lenders 'double charging' Scottish homeowners where court proceedings are re-raised following the Supreme Court ruling in RBS plc v. Wilson and others.

It is estimated that as many as 5,000 cases were requried to be dismissed for want of service of a pre-court 'calling-up notice', with up to 15,000 historic cases potentially affected. News of the FSA's intervention was revealed in The Herald over the weekend.

Govan Law Centre's Jennifer Laughland, who defends mortgage repossessions across Ayrshire as part of a local partnership 'AHAP' service, said: “We welcome the FSA’s intervention on this important issue, particularly as we are now seeing repossession actions, which had been dismissed after last year’s Supreme Court ruling, being brought back to court".

“The clients whom we see facing homelessness through mortgage arrears are generally struggling to pay their mortgage and make ends meet. The last thing they need in these tough financial times is to be billed twice by their bank’s lawyers, through no fault of their own. The FSA’s action here will protect some of the most vulnerable homeowners in Scotland.”

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".

Prodigal son returns to Govan after 30 years

GLC's Chairperson, Tommy McMahon, with
GCC's  Local Heritage Officer Kate Dargie.

The 127 year old 'Govan Baby'  has been returned to the restored Aitken Memorial Fountain in Govan's Water Row, marking the ongoing physical regeneration of Govan, which Govan Law Centre has fully and consistently supported for many years.

The Aitken Memorial Fountain was created in 1884 and is the only surviving example the decorative, cast iron drinking fountains produced by Cruikshanks & Co.'s foundry at the Denny Works, Stirlingshire.

Hills Trust pupil's impression of
the Aitken Memorial Fountain.

The fountain commemorates Dr. John Aitken (1838-1880), who provided medical care to the workers of the nearby Ibrox and Drumoyne collieries, and who served as the Police Surgeon and Medical Officer to the Burgh of Govan from 1864, until his death in 1880.

The Aitken Memorial Fountain will be officially opened on Wednesday 1 June 2011 at 10am, with celebrations, craft, farmer and market stalls running until 3pm.

Royal Assent for Property Factors (Scotland) Act 2011

The Property Factors (Scotland) Act 2011 has received Royal Assent this month, marking the end of a four year campaign initiated and led by Govan Law Centre (GLC), and the start of a better deal for Scotland's homeowners.

The genesis of the Bill was grassroots. At GLC's fortnightly casework meetings our solicitors would repeatedly flag up the growing number of instances of homeowner exploitation by property factors. GLC's local Board of Trustees were equally troubled with the ability of Glasgow's citizens to be ripped-off with impunity. It was apparent something had to be done to redress the imbalance between the rights of unregulated companies and the rights of Scottish homeowners, many of whom were financially or otherwise vulnerable.

A Bill proposal and consultation paper drafted by GLC was first introduced in the Scottish Parliament by the then Govan MSP Gordon Jackson QC in March 2007, but had insufficient time to progress. The reins were quickly picked up by Maryhill MSP Patricia Ferguson and in October 2007 a fresh proposal and consultation paper was published by the Scottish Parliament. High profile support came from a series of BBC tv and radio investigations and a campaign for law reform sponsored by Glasgow's Evening Times newspaper.

Constant publicity led to the OFT launching a market investigation into Scotland's property factor industry, which had the effect of kicking Patricia Ferguson's Bill proposal into the long grass. Despite the OFT recommending the Scottish Government's favoured solution of 'voluntary accreditation', Patrica Ferguson and GLC ploughed on, gathering support and finally making a winning case for major law reform to protect Scottish homeowners.

GLC's Mike Dailly and draftperson of the Bill said: "We're very proud of the Property Factors (Scotland) Act 2011 because its a victory for common sense, and will help prevent homeowners in Scotland being exploited, while providing a new accessible tribunal remedy with 'legal teeth' if they do get stung.  It's also an example and case in point of the importance of local community law centres. Law centres are being threatened in England and Wales, but we need more of them in the UK, not less".

"Without Patricia Ferguson's tireless dedication and hardwork the Bill would not have seen the light of day. We would acknowledge the tremendous support from Patricia's researcher Chris Kelly, the Parliament's excellent Legislation Team, the Local Government Committee and various civil servants at the Scottish Government who all helped to make this progressive piece of legislation possible".

GLC warns UK consumers 'don't get ripped off when seeking PPI refunds'

The High Court in London has rejected the Brittish Bankers Association (BBA) judicial review which challenged the UK's financial regulator's power (Financial Services Authority, FSA) to require banks to review all of its Payment Protection Insurance (PPI) complaints (most of which the banks had rejected).

The challenge related to rules introduced by the FSA in August last year and whether breaches of FSA 'Principles' (high level general rules) can be a basis of redress for a customer who complains. The banks had unilaterally decided to place all complaints on hold pending their judicial review; the FSA had not issued a waiver to permit them to do this.

Campaigners have estimated that the High Court's decision could lead to three million customers receiving £4.5bn in refunds, consisting of premiums and interest. However, banks said they would continue to put claims on hold until they have decided whether to appeal against the decision, despite a call from the FSA to reconsider complaints immediately.

Govan Law Centre's Principal Solicitor, Mike Dailly, today warned consumers not to be ripped off by dodgy Claims Management Companies who promise to get you thousands of pounds back for an upfront fee of around £500 hundreds pounds or more.

Mike said: "Many people will be eligible for a refund but not everyone. You can check your eligiblity online using Money Saving Expert's free guide, which also has free style letters on how to complain and obtain a refund.  The key point is that you do not need to pay a Claims Management Company or anyone else to get a refund. You can do this yourself by writing a letter. There is no need to go to court. So if you've been ripped off with a useless PPI policy don't get ripped off again when it comes to seeking a refund".

PPI covers payments for loans and credit cards if the policyholder falls ill or loses their job, but the policies are riddled with loopholes, such as exempting claims from the self-employed or those with back injuries, the major cause of workplace illness in the UK.

Govanhill Law Centre client wins sex discrimination case

A Govanhill Law Centre client has recently received payment from Pakistan International Airlines (PIA) of £18,357.57 following a successful Employment Tribunal claim.

Mrs. R, who wishes to remain anonymous, raised a claim against her former employer for unfair dismissal as a result of pregnancy, and sex discrimination.

Mrs R had worked for P.I.A on a series of fixed term contracts for around 18 months. She took a period of authorised unpaid leave to attend a family wedding. Mrs R fell ill at the wedding and her husband contacted her employer to advise she would be unable to return on time. Despite the fact she produced a medical certificate, Mrs R was dismissed for gross misconduct on her return to work, without having an opportunity to explain her position. Ms R appealed the decision but her appeal letter was ignored. Mrs R believed that the real reason she had been dismissed was because her employer knew she was pregnant and wanted to use her sick leave as an excuse to dismiss her.

After hearing three days of evidence, the Tribunal found that the true reason Mrs R had been dismissed was because she was pregnant and that she had been unfairly dismissed. The Tribunal held that this constituted an act of sex discrimination, contrary to section 3A(1) (a) of the Sex Discrimination Act 1975. Mrs R was represented by GhLC solicitor Lindsay Paterson at the hearing.

The Tribunal issued its decision in October 2010, but Mrs R has only recently received her settlement. As a result of the delayed payment, the Respondents were forced to pay additional interest of £237.37 to Mrs R.

Mrs R said: “While I worked at P.I.A. my boss treated me badly. He told me I should wear high heels to look smart and tall. He insulted me in front of my colleagues. I was dismissed after he knew I had fallen pregnant and this caused me a lot of stress and financial worries. My husband and I had to move out of our home as we could not afford the rent".

"I am very happy with the Tribunal decision. I had worked in the travel industry for 7 years and I felt my good reputation had been damaged. I can now hold my head up high and feel confident to apply for jobs in the future. I want to thank Govanhill Law Centre – if it was not for them, I would not have won my case “.

Lorraine Barrie, Associate Solicitor at Govanhill Law Centre said: “We are delighted that our client has now received full payment from her former employer, after a long wait. Our client was very distressed following her dismissal and she suffered significant financial worries when her first baby was on the way. We are pleased that the Tribunal have recognised the significant stress caused to our client by awarding £5,000 for injury to her feelings”.

Places still available on GLC's Employment law seminar on 14 April 2011

GLC's 'Employment law basics for NQ solicitors, trainee solicitors and advisors' is still taking bookings - to reserve a place please call 0141 440 2503 or you can use our booking form. 

Our half day seminar is aimed at advisors with little or no knowledge of employment law.  The training event will help solicitors and advisors identify potential breaches of the law, and provide practical tools to allow the advisor or the client to take further action.

The seminar includes contributions from the following speakers: Lorraine Barrie, Associate Solicitor at Govanhill Law Centre. She represents a number of clients with employment law disputes including unlawful deductions from wages, unfair dismissal, sex discrimination and redundancy issues. She has assisted migrant workers to report breaches of the law to the relevant enforcement agencies.

Giles Woolfson is a director of McGrade + Co. He has specialised in employment law for over ten years, advising both employers and individuals on various employment issues including whistleblowing, discrimination, breach of contract, unfair dismissal, restrictive covenants and TUPE. He is also a trained mediator.

Paula Chan is a solicitor at McGrade + Co. Paula completed a specialist traineeship in employment law and has practiced solely in this area following qualification. She has experience in a range of contentious and non-contentious work having represented and advised individuals, companies, voluntary organisations and trade unions.

Cost: £65 (concessionary rate for voluntary organizations £55). Registration 9.30am, 10am to 1pm.

Scotland ill-prepared for ‘summer repossession spike’ - GLC calls for proactive solutions

While the UK Council of Mortgage Lenders (CML) predicts a 11% increase in mortgage repossessions across the UK in 2011 as against the figure for 2010 [1], there are a number of reasons to think this figure could be optimistic; however there is absolutely no doubt that Scotland is on course for a ‘summer repossession spike’ according to Scotland’s Govan Law Centre (GLC).

The principal reason for the Scottish spike is due to the fact that between 3,000 and 5,000 mortgage repossession court actions had to be abandoned following the decision of the UK Supreme Court in RBS plc v. Wilson and others, at the end of November last year. Many of these cases have had to be re-raised, and these new cases will start to call in court (following the time it has taken to undertake the pre-action ‘calling-up notice’ and the re-raising of proceedings in compliance with the Home Owner and Debtor Protection (Scotland) Act 2010).

In addition, the CML had estimated there were 15,000 historic cases in Scotland where lenders had obtained decree but not enforced it, because payment arrangements were in place; many of these cases will now require fresh court actions as such decrees are no longer sound following the Wilson case [2].

In addition to these Scottish drivers, there are also UK-wide drivers which could not only result in more repossession actions in Scotland, but critically, lead to an increase in the number of cases which are very difficult to resolve:  

1. The UK Government’s decision last October to significantly reduce the level of Support for Mortgage Interest (SMI) for those out of work;
2. The impact of UK Government public spending cuts on jobs, and the wider impact of welfare cuts too;
3. The fact that additional forbearance by lenders – since April 2009 at the request of the UK Government – may now be masking the true number of financially difficult cases; and
4.  The uncertainty over when mortgage interest rates will ultimately begin to rise.

Govan Law Centre’s position is that three urgent solutions are required to help address the expected additional pressure in Scotland:

1. Scrap the restrictive Mortgage to Rent rules introduced by the Scottish Government in March 2009, invest more in the Scheme, and extend this excellent Scottish safety net. In June 2009, we contributed to a report which predicted the Scottish Government’s rules would result in a ‘post code lottery’ for vulnerable homeowners facing repossession with many households rejected due to the restrictive eligibility criteria.[3] A FOI response to Govan Law Centre from the Scottish Government confirms we were correct[4].

For the period 31 August 2009 to 31 August 2010 almost half of the people applying to the Scottish Government Home Owner Support Fund (the Mortgage to Rent Scheme and Shared Equity Scheme) were refused help; out of 719 registered applications, 315 did not proceed.

Worryingly, of those Scottish households turned down for help, 37% were refused help because their home was valued more than the Scottish Government new valuation limit (which is a crude figure based upon the lowest quartile value of houses within a local authority area in relation to the number of rooms); while another 37% were refused help because no local authority of housing association was willing to participate in the Scheme. Clearly, the Scheme is unable to cope with the current demand, never mind the expected significant increase in demand which GLC predicts later this year.

2. Introduce a new ‘Post Repossession Tenancy’ in Scots law so that occupiers whose homes had been repossessed could lease them back from their lender until the properties were sold. At present lenders would be highly unlikely to do this, as they would be granting a Short Assured Tenancy of at least six months, with complex liabilities for repairs etc., However, we know that many properties can take several months or considerably longer to be sold and it would benefit lenders, repossessed occupiers and local authority homelessness departments if former owners could enter into a simple ‘no frills’ tenancy until the property was sold. Former owners who were unemployed or on low incomes would be eligible for housing benefit, and such an initiative would utilise otherwise empty properties in Scotland.

3. Enhance the requirement for early intervention to prevent homelessness in Scotland – we recommend an upgrading of section 11 of the Homelessness etc., (Scotland) Act 2003 to require local authorities to use innovative techniques (such as embedded homelessness triggers within their computerised client contact systems) to detect and prevent threatened homelessness much earlier, and to provide a co-ordinated and holistic response in terms of legal, money advice, welfare rights and social care services.

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[1] http://www.cml.org.uk/cml/media/press/2836

[2] www.cml.org.uk/cml/filegrab/rbs-v-wilson-nw.pdf

[3] http://www.govanlc.com/help_is_at_hand_report.pdf

[4] Scottish Government Housing and Regeneration Directorate written response dated 12 November 2010, from Keith McDowell, HOSF Scheme Co-ordinator for Scotland.