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.