Confusing wording regarding Hali-fax’s SVR in up to 300,000 mortgage contracts could cost it £500m in customer redress.
Lloyds Banking Group revealed last week that it has agreed a deal with the Financial Services Auth-ority to compensate up to 300,000 customers who took out a mortgage between September 20 2004 and September 16 2007 and still held that mortgage in January 2009.
Halifax had a cap on its SVR mortgages of 2% above base rate but it raised this to 3% in Sep-tember 2008 and wrote to those affected. The lender admitted that its contract had the potential to confuse borrowers and as a result, many who believed their SVR could not be more than 2% were put on the higher rate without warning.
Ray Boulger, senior technical manager at John Charcol, says Halifax was allowed to change the SVR cap according to its terms and conditions.
But he adds: “The problem was that the terms and conditions were unnecessarily complicated and the issue was whether they were com-municated properly.”
Nationwide Building Society had a cap of 2% but kept it at that level. However, Skip-ton Building Society removed the 2% cap on its SVR in March 2010, citing exceptional circumstances.
A spokeswoman for Skipton says: “Our position hasn’t changed and what has happened to Lloyds group is a matter for it. Our terms and conditions were clear and we were allowed to remove the cap in exceptional circumstances.”