BBC News – Bank of Scotland unfairly double billed customers says judge

[Legal Beagles]

Bank of Scotland has been unfairly double billing customers who fell behind on their mortgages, a High Court judge in Belfast has ruled. In a scathing verdict, Master Ellison said the bank’s behaviour had been “unconscionable”. He said it had caused borrowers to be “plunged into depression”. The findings could have implications for thousands of […]

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[MIKE770]

Re: BBC News – Bank of Scotland unfairly double billed customers says judge

" unconscionable" = Good One ==== Bull Shxx

[enaid]

Re: BBC News – Bank of Scotland unfairly double billed customers says judge

Am sure there will be others hiding under rocks or muck heaps who have done exactly the same. We can only hope that this is not concluded on the side of the banks etc as always seems to happen

[EXC]

BOS lose NI test case

''Bank of Scotland has been unfairly double billing customers who fell behind on their mortgages, a High Court judge in Belfast has ruled.......''

http://www.bbc.co.uk/news/uk-northern-ireland-28842534

''Chris McGrath LLB, Solicitor with Housing Rights Service, discusses a recent Housing Rights Service High Court Case where Bank of Scotland was found to be double billing customers in mortgage arrears.....''

http://www.housingrights.org.uk/news...d-held-account

[FlamingParrot]

Re: BOS lose NI test case

Absolutely disgraceful! :mad2: :mad2: :rant: :rant:

Will those unfortunate borrowers who lost their homes as a result of this appalling and devious practice, have recourse to compensation of some sort?

[Amethyst]

Re: BBC News – Bank of Scotland unfairly double billed customers says judge

https://www.courtsni.gov.uk/en-GB/Ju...ter11Final.htm

[1] These are claims for (a) possession in the first intituled action (“Rea”), (b) a stay of enforcement of an order for possession in the second intituled action (“McGready”), and (c) leave to enforce a suspended order for possession in the third intituled action (“Laverty”). In each case the plaintiff’s claim to possession arose pursuant to a charge over a dwelling. The dwellings are occupied by, respectively, MsRea in the first action (her later partner and co-mortgagor MrDonnelly having died in 2012), both Mr and MrsMcGready in the second action and MrLaverty the first defendant in the third action. Significant arrears of monthly instalments have arisen in each of the cases. However, in the first and second actions significant and regular monthly payments have been made by the defendant borrowers for some time now. In the normal course of such proceedings arrangements for payment of arrears might have been agreed between the parties or imposed by the court in the form of orders for possession suspended on terms that the defendants pay the ongoing monthly instalments and a monthly sum towards the arrears to address their default. Those observations do not however apply to the third action in which the first defendant, Mr Laverty, as the only defendant in occupation of the dwelling following a relationship breakdown with Mrs Laverty some years ago, was stated by his Counsel at hearing to be unable to afford to put a proposal to address the arrears.

[2] All three cases raise a point of some importance, namely whether the lender may both (a) consolidate (or, as it is often called, “capitalise”) arrears of monthly instalments with the mortgage balance upon which the instalments are calculated with the effect of increasing the contractual monthly instalments to spread those arrears over the residue of the mortgage term and also (b) rely on the arrears so consolidated as outstanding arrears for the purpose of possession proceedings.

[3] Broadly, the plaintiff insists that it can do exactly that. It argues that the consolidated arrears were not extinguished qua arrears (which is normally what happens when arrears are consolidated) because the plaintiff took the step of consolidation unilaterally, ie without the consent of the borrower specific to that step save insomuch as consent had been given to such a step in the mortgage contract. Indeed the plaintiff does not accept that the relevant restructuring of the mortgage accounts that I have just described is either capitalisation or consolidation, and avoids the use of either word when referring to it. However for the purpose of this judgment (and without doing so by way of prejudgment) I will refer mostly to the practice of the plaintiff which I have just described as “unilateral consolidation”. [4] The defendants (save Mrs Laverty who has not engaged in these proceedings) contend that, for reasons I shall explain, the practice is an unconscionable one because it prevents them from putting a proposal to repay the arrears to the court and prevents the court from exercising, or exercising properly, its discretion to defer possession. That discretion arises under the Administration of Justice Act1970 (“the 1970 Act”) section 36 and the Administration of Justice Act 1973 (“the 1973 Act”) section 8 and, if exercised, allows the court to make either an order adjourning the proceedings or a suspended order for possession on terms which would allow the defendants to pay the arrears within a defined or ascertained time which the court regards as reasonable. The defendants also argue that the plaintiff’s practice compromises the affordability of payments towards arrears under pre-existing and future suspended orders for possession.

[Amethyst]

Re: BBC News – Bank of Scotland unfairly double billed customers says judge

[57] The plaintiff’s reliance on extinguished arrears may fairly be described as double-billing. Unilateral consolidation with double-billing creates very real problems for borrowers, their advisers and the court. To the extent at least of the double-billing, it is unconscionable.

[58] First, the practice unfairly and confusingly distorts perceptions of affordability. Borrowers in default are faced with a monthly instalment increased to address a sum representing the arrears over the rest of the mortgage term and a demand (and indeed threat of repossession) for the immediate payment of the erstwhile arrears. This is, to say the least, confusing and must be a disincentive for many borrowers to make best realistic proposals to the lender or the court to address the arrears – particularly in light of an undisclosed “arrears element” in the monthly instalments. It also distorts the true arrears figures in the minds of those approached for advice and the court.


[59] Secondly, the practice means that if there is a proposal for an order for possession suspended or an adjournment on terms as to payment of a monthly sum towards the arrears as well as the ongoing monthly instalments, the court will not be able to define or ascertain the period within which that proposal, if maintained, will clear the arrears. The “reasonable period” within which under s8 of the 1973 Act the borrower must be likely to be able to address the arrears must be a “defined or ascertainable” one: Royal Trust Co of Canada –v- Markham as affirmed by successive Chancery Judges in this jurisdiction in Alliance & Leicester Building Society -v- Carlile and National&Provincial Building Society -v- Lynd. The court cannot accurately define or ascertain the period where an undisclosed amount of the consolidated contractual monthly instalment relates to part of the arrears relied on by the plaintiff.


[60] Thirdly, that undisclosed “arrears element” in post-consolidation instalments must lead to a nonsensical and troubling situation of “double-counting” when the plaintiff adds arrears of post-consolidation monthly instalments to those of pre-consolidation instalments (even accepting as correct the plaintiff’s incorrect submission that the earlier arrears were not extinguished by the consolidation). To some extent, the arithmetic must mean that the plaintiff is overstating, by duplication or double-counting, the total “arrears”.


[61] Fourthly, the plaintiff’s failure to explain its unilateral consolidation and double-billing in previous proceedings means that many suspended orders for possession (and indeed many other resolutions agreed between the parties) were made on erroneous assumptions as to: (a) the correct amount of arrears (since pre-consolidation “arrears” no longer existed); (b) how and when the arrears would be addressed in the future (as the undisclosed “arrears” element in consolidated monthly instalments would accelerate payment of the true arrears) and, as I have mentioned, the court’s ability to ascertain the true repayment period was significantly impaired, and (c) the future computation by the plaintiff of the contractual monthly instalments requiring to be paid in addition to the arrears.


[62] Fifthly, the misassumptions I have mentioned persuade me that when this plaintiff brings an application for leave to enforce a suspended order for possession it may face an uphill struggle unless by its grounding affidavit it: (a) confirms that any future “material” consolidation of arrears in the case will be in a strict compliance with the requirements of “good capitalisation” as defined by the FinancialConduct Authority (thereby requiring among other things the informed agreement of the “customer”); (b) discloses with particulars all past consolidations (save permitted “immaterial’’ capitalisations of minimal amounts) and all past double-billing events; (c) states the current state of account between the parties as to monthly instalments, arrears and so forth as prescribed (for affidavits grounding claims for possession) in Order88 rule 5(3) of the Rules, (d) states the true arrears when the relevant suspended order and where appropriate any order varying its terms were made; (e) clarifies the particular circumstances in which it would be just to permit enforcement of the original order for possession (as varied by any subsequent order which had been made) notwithstanding the misassumptions I have mentioned; and (f)confirms in terms that the plaintiff in its figures is not relying on any pre-consolidation arrears.

[EXC]

Re: BBC News – Bank of Scotland unfairly double billed customers says judge

Bank of Scotland to appeal 'double bill' court ruling

Bank of Scotland has said it will appeal a Belfast High Court judgement that ruled it had unfairly double billed customers who fell behind on their mortgages.

In a scathing verdict, Master Ellison said the bank's behaviour had been "unconscionable".

The bank is a major mortgage lender in NI under the Halifax brand.

Its parent company, Lloyds Banking Group, said it would appeal on "a number of areas" in the ruling.

It said there were aspects of the judgement which "we do not consider to be representative of the way we manage the mortgages of customers who have entered arrears".

'Fictional arrears'
The case focused on the way the bank added arrears to the original mortgage borrowing.

That is a standard practice for tackling arrears, known as capitalisation, which has the effect of increasing borrowers' monthly repayments.

The judge ruled that once capitalisation had taken place, the mortgage should no longer be considered as in arrears.
However, the bank continued to treat such mortgages as in arrears and used that as the basis for bringing legal cases.

The judge said this meant borrowers had been held in fear and were being threatened with repossession, on account of an "erroneous and fictional arrears balance".

Implications
He said the bank's actions had distorted perceptions of affordability for struggling borrowers.

That was because they faced increased monthly payments to reflect the capitalised arrears and a demand for the immediate payment of those arrears.

The judge said this also distorted the true position in both the minds of those approached for advice and the courts.

He said this meant that "many" court decisions concerning suspended repossession orders had been made on "erroneous assumptions".

The ruling could have implications for thousands of Bank of Scotland mortgage holders across the United Kingdom.

http://www.bbc.co.uk/news/uk-northern-ireland-28886656

[Amethyst]

Re: BBC News – Bank of Scotland unfairly double billed customers says judge

http://legalbeagles.info/bank-of-sco...ling-judgment/