Further to a couple of previous posts:(posted 8461 days ago)The government want responses to the Banking Services Consumer Codes Review's 7 key questions on the functioning of the Mortgage Code. I've put a basic (possible) outline together, which is below. You can see from this the direct relevance to many 'shortfall' cases.
I'm thinking that it would be good if we could submit a response as a group. If people would like to add their own comments and amendments over the next couple of days, I'd be happy to collate them and produce a summary document to go to the Treasury (who are dealing with this).
We have till 28th Feb.
Thanks.
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FAO: Banking Services Consumer Codes Review Group
These comments relate specifically to the Mortgage Code.
1. Is the consultation process of drawing [the Mortgage Code] up satisfactory?
No. The codes need to be drawn up using a much broader range of sources. Input from users' and victims' groups, for example, would be welcome. While such groups cannot of course dictate the contents of a code of practice, they could usefully highlight existing gaps in the Code's provisions and discuss examples of lenders' poor practices authoritatively.
2. Do they cover all the issues that they should?
No.
The Mortgage Code essentially applies to new business and existing mortgages, but some major lenders conduct a great deal of 'business' with ex borrowers which is, therefore, neither regulated nor monitored.
Specifically, there is no code of conduct for banks' behaviour with regard to old mortage accounts, notably mortgage shortfall 'debt' recovery on older repossessions.
For example, some of the 'business' which lenders conduct with ex borrowers is the resurrection of alleged mortgage shortfall 'debts' which were effectively written off many years ago, often by building societies whom the lenders took over in the 1990s. The building societies released the mortgage deeds, disposed of original records such as valuations, and clearly had no intention of ever pursuing 'claims'. Ex borrowers are now being contacted by lenders, and, despite the fact that the lenders have no way of ever proving these 'claims', or demonstrating their accuracy and legal validity to the ex borrowers, the lenders are pursuing a policy of pressuring vulnerable ex borrowers into making large 'settlements' on unproven and unproveable 'debts'. The ex borrowers are offered no protection by the Mortgage Code.
3. Are they full complied with by the industry?
No.
MPs are rightly concerned. Forty-two thus far have signed an Early Day Motion (EDM 62), sponsored by Mike Hancock MP, on this issue:
"EDM 62 DEBT RECOVERY 07.12.00 Primary Sponsor: Hancock/Mike That this House denounces the unacceptable tactics used by lenders, specifically Abbey National Bank, to try to force settlements on debts which they will not properly substantiate; notes that such tactics breach the Mortgage Code while lenders are not being held to account; condemns mortgage shortfall debt recovery by lenders like Abbey National Bank many years after repossession; and therefore calls upon the Government to take the necessary steps to ensure borrowers are given the protection they deserve from lenders intent on maximising their profits at any expense."
I understand that Mike Hancock, Geraint Davies, Nick Harvey, Bob Russell and Tony Benn are just the latest MPs to 'take on' lenders on behalf of constituents.
The Mortgage Code notes that the lenders will comply with the law and with relevant codes of practice (10.1), but these codes do not include Civil Procedure Rules.
The Mortgage Code states (14.2) that it will explain to customers that 'you have the right of access under the Data Protection Act 1998 to your personal records held on our files', but fails to add that these records do not include those held on paper, microfiche or microfilm, and that banks will therefore refuse to supply it.
The Mortgage Code states (14.1) that 'we will treat all your personal information as private and confidential (even when you are no longer a customer)', but fails to add that banks will pass it firms of debt collectors, lawyers and private investigators without your knowledge or consent, and without trying to resolve the problem directly with you first.
The Mortgage Code states (15.1) that members have 'internal procedures for handling complaints fairly and speedily', but in 'shortfall' cases this seems to involve merely the rapid issuing of a 'deadlock' letter. Given the lack of documentation with the ex borrower has been (and indeed can be) provided, there is little chance of the ex borrower putting a case together for the Ombudsman within six months. Indeed, it is unclear whether or not these cases fall within the Ombudsman's jurisdiction, and how effective the Ombudsman can be in assessing old building society accounts for the the documentation is incomplete.
4. Are they monitored and enforced effectively?
No.
According to the Council of Mortgage Lenders (CML) a lender is, under the Mortage Code, obliged to furnish the ex borrower with proper evidence and proof of its shortfall claim, but yet the CML is not at all interested in pursuading the lenders to comply with this requirement. It relies on the ex borrower to jump through hoops to enforce the CML's Mortgage Code, by suggesting that, for example, the ex borrower should in the first instance take the matter up with the Banking Ombudsman.
But is the Banking Ombudsman impartial? A registered company, it comprises bankers judging bankers. Other issues give cause for concern. The Banking Ombudsman is refusing to grant tribunals to those who ask for them, in contravention of his duties under the Human Rights Act (ECHR Article 6). On top of this, as the Treasury Select Committee knows, there a worrying amount of complaints about Ombudsman decisions being made to the Financial Services Authority (FSA).
5. Do they offer adequate redress for legitimate grievances?
No. See 4, above.
6. Could consumers be better informed about what their rights are?
Yes. See 2-4, above.
In addition, consumers need to know that their rights under the Human Rights Act 1998 (HRA) have been factored in. For example, the HRA, as the Chief Ombudsman Walter Merrick acknowledges, gives consumers the right to insist upon a tribunal hearing. Not only is this not widely known, but there is considerable resistance being shown by the Banking Ombudsman to the incorporation of this basic right into its practices.
7. Do customers need more information or more clearly presented information?
Yes. See 1-4, above.
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