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05/03/2002
Halifax withdraws £7m for customer payouts
The Halifax is to pay out more than £7 million to 10,000 of its borrowers.
The mortgage lender made the decision after a ruling by the Financial Ombudsman found that it was wrong to keep some types of mortgage holders on higher rates while offering cut-price loans to new customers. The payout means affected customers will receive £500 on average each.
The payouts came to light after the Ombudsman issued briefing notes on January's decision to reject Halifax's appeal. This followed a price war sparked by Halifax last year between the mortgage banks by offering cut-price loans to new borrowers but keeping existing customers on mortgages that were linked to a higher standard variable rate.
One couple eventually queried their capped rate mortgage and complained to the Ombudsman that their base rate was higher than other customers'. Halifax has now been ordered to compensate the couple.
It also ruled that customers would be refunded the amount they would have saved from the date they asked to be transferred to the lower rate to the end of March 2002.
However, the 20,000 customers who did not ask to be transferred until after February 1 are not entitled to refunds, although Halifax is giving them a goodwill payment of £100 each.
(MB)
The mortgage lender made the decision after a ruling by the Financial Ombudsman found that it was wrong to keep some types of mortgage holders on higher rates while offering cut-price loans to new customers. The payout means affected customers will receive £500 on average each.
The payouts came to light after the Ombudsman issued briefing notes on January's decision to reject Halifax's appeal. This followed a price war sparked by Halifax last year between the mortgage banks by offering cut-price loans to new borrowers but keeping existing customers on mortgages that were linked to a higher standard variable rate.
One couple eventually queried their capped rate mortgage and complained to the Ombudsman that their base rate was higher than other customers'. Halifax has now been ordered to compensate the couple.
It also ruled that customers would be refunded the amount they would have saved from the date they asked to be transferred to the lower rate to the end of March 2002.
However, the 20,000 customers who did not ask to be transferred until after February 1 are not entitled to refunds, although Halifax is giving them a goodwill payment of £100 each.
(MB)
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