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Editor’s note: West Brom: a case in point

Last week saw a court judgment handed down that some claim will have severe knock-on effects on the way lenders are permitted to charge interest.

The Court of Appeal found that West Bromwich Building Society should not have raised interest rates on buy-to-let tracker mortgages without a rise in Bank of England base rate.

But the big question now is whether the case sets a precedent that can be used to challenge other lenders that have acted in a similar way.

On the face of it, the main lenders in the frame are Skipton Building Society, Manchester Building Society and Bank of Ireland, although there are others.

Immediately after the West Brom judgment, the public face of lenders was calm, although there were rumours of crisis talks at trade bodies and lenders behind closed doors.

But now that lawyers have had time to pick over the case, lenders have come out swinging. The consensus of Skipton and the Building Societies Association is that the outcome of the West Brom case is isolated and the findings cannot be carried over to other examples. Mortgage Strategy understands the Manchester feels the same way.

But Property 118 and its lawyers disagree and want to bring cases against the above three lenders. Unless they have a change of heart, the only thing standing in the way of fresh legal challenges is the need to raise enough cash.

Unfortunately for the industry, Property 118 members have plenty of that. And they will have even more when some of them get their share of the £27.5m payout from West Brom.

If more court cases find against lenders, an interesting question arises as to what extent this may in fact be bad for consumers if it means lenders make up for a sudden lack of income in one area by increasing costs in another.

Regardless, it looks like more legal action is inevitable. Of course, it is too early to say which side’s arguments will prevail. The only surefire winners here, in the short term at least, will be lawyers.



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  • Mark Alexander - founder of Property118 Action Group 17th June 2016 at 12:57 pm

    I think it is very much in the interests of the industry that Property118 members are prepared to fight for their rights and hold mortgage lenders to account.

    The despicable actions of West Brom caused a loss of faith in the mortgage industry, hopefully the win at the Court of Appeal will help to restore that.

    Being a retired broker I would also like to point out that many people affected by the tracker rate hikes imposed by West Brom, and previously BoI wanted to sue brokers for not advising them correctly. They would have had a very good case if Property118 hadn’t got the Court of Appeal to overturn the FOS and the High Court rulings.

    I persuaded all affected borrowers to focus on the REAL rogues and to my knowledge not a single case of a brokers PI policy being attacked has been reported. Many started initial proceedings on exactly that basis but I talked them out of it and managed to redirect their anger to West Brom.

    I hope to be able to do the same with the borrowers affected by similar injustice BoI, Skipton BS and Manchester BS. It is very much in brokers interests to support these cases too. If they don’t, and if sufficient money isn’t raised to take those lenders to Court, then the FOS rulings will stand and brokers PI policies will be at risk. The ambulance chasers will not stay parked forever!

    Property118 Action Group are crowdfunding in order to raise the money necessary to fight these legal battles – please see

  • Neil 17th June 2016 at 9:18 am

    If you attack consumers who purchase mortgages you will end up with no lenders and no magazine which I personally think would be a shame.

  • shaun campling 17th June 2016 at 12:41 am

    west brom can make whatever claims they wish about fairness and looking after savers etc, but the facts are they were losing money on a bad deal and they tried to extricate themselves from it, by trying to use a generic condition in the contract, that to any reasonable person, was quite irrelevant to the particular product in question.

  • Jo Spreckley 16th June 2016 at 11:33 pm

    I’m one of the Property 118 group. I got my own money back (not a payout or windfall!) after judges ruled West Brom had wrongly put their tracker interest rate up. I believe all mortgage borrowers will benefit from this case as in future lenders will think twice before
    raising rates without justification. Like many of the group I have a small portfolio and am not a wealthy investor. 450 of us came and won because this was wrong!

  • Rob Hayes 16th June 2016 at 10:22 pm

    Lawyers will only be the winners if lenders twist contracts to the point of unlawfulness

    Everyone knows that a tracker is
    Everyone knows what a cap is

    To pretend it’s something else is, at best, wrong.

  • richard jarvis 16th June 2016 at 9:05 pm

    Due to the successful actions of Property 118 the “surefire winners” will be those who will have the terms and conditions of their contracts honoured.
    If the West Bromwich had wanted to sell me a product that they could alter the rate of at their whim they should have called it a SVR mortgage as opposed to the Lifetime BOE base rate tracker mortgage that I actually purchased. I wouldn’t have bought it.
    If lenders don’t want to honour their offers they shouldn’t offer them. Property 118 have proved that there is still justice for the Private Landlord and they should be applauded for doing so..

  • Mark Hartell 16th June 2016 at 8:02 pm

    Your final comment is that the only sure fire winners will be the lawyers. Absolutely correct. Let’s remember what has happened here. West Brom unlawfully changed the contract terms and more than doubled the interest payable on our mortgages. After 3 years and putting more money at risk to take this to court we can finally look forward to a return of our money. NOT a windfall or compensation but just getting back what was ours anyway.
    I am no crusader and have no interest in fighting legal battles that do not affect me but we must never forget that the root cause of the problem in that these organisations made their own problem by lending long (25 years) and borrowing short. If they had matched their lending with borrowing on the same terms then there would be no issue.

    Savers, pensioners and others should look to the management of these organisations for “blame”