Halifax has to pay £500m to mortgage holders
Because of not informing over half a million customers about potential increases in its standard rate mortgage, Halifax is facing a payment of £500m in compensation, the building society, due to its mortgage offer documents being potential confusing, reached an agreement with the Financial Services Authority.
The wording in offers, sent between September 2004 and September 2007, to over 600,000 customers and those that still had the mortgage in January 2009 were affected since it said the interest rate on the Halifax standard variable rate (SVR) was capped at 2% above the base rate of the Bank of England.
Nevertheless in September 2007 the cap was removed from the terms and conditions and the SVR was then moved to 3% above the base rate due to extenuating economic issues.
The wording in the offer meant the group only had to contact those customers paying the SVR although all the customers may have been under the impression that they all would be contacted.
It was not made clear, that an increase in monthly repayments was due to a 1% increase in the cap, to customers and the Bank of England’s base rate had been dropping rapidly at this time thus created even more confusion.
Lloyds Banking Group said it would be contacting all those affected and offering around half of them compensation, it said that Halifax operates with the highest level of integrity and is committed to the same and in treating customers fairly. They felt a programme to contact all affected customers was the appropriate course of action by making goodwill payments.
On an average about £500m will be shared between 300,000 customers would amount to £1,667 per customer and is based on the difference between the actual amount paid and what it would have been had the 2% cap remained in place.