RBS apply erroneous default and compromise mortgage application

[Magrew]

RBS applied a default on me in error in 2007. I was unaware that this had occurred until I applied for a mortgage in late 2008 and found that no financial institutions would entertain my application due to my credit score. I enrolled the help of a mortgage advisor to guide me through these difficulties.

The mortgage advisor helped me identify the presence of the default. Unfortunately I could not get it lifted at the time becuase I could not prove it had been applied in error. I had to secure a mortgage so the only financial institution that would discuss mortgages with me was the one that had applied the default. Effectively monopolising my business and denying me the opportunity of dealing with other mortage suppliers. It appeared to me that the only way that I was going to secure my mortgage was though negotiation with their underwriters, because there were other matters that made the purchase of the specific property at the specific time quite critical I used the services of the mortgage advisor to negotiate the deal.

A few months after purchasing my new property I discovered paperwork which proved the erroneously applied default. The bank would obviously have had these papers on file but chose to remain silent on that fact. I presented these papers to the bank. They admitted their error and offered some token compensation, around £400 I recall and they removed the default. I cried foul and pointed out that they had left me in the position where I had to accept a mortgage rate of 4.25% when the market was offering 1.99% at the time I applied for my mortgage therefore the compensation should redress this balance over the two years fixed term of the mortgage. They offered me half the difference. I refused this and placed a complaint with the ombudsman.

I understood from FOS documentation that the principle of their considerations was to place the consumer in a similar position as they would have been had the FI's error not occurred. After 18 months wait the ombudsman came back last Friday with a decision that the FI should pay me only £300 compensation for distress and inconvenience. They placed no requirement to rectify the disadvantage to me of the higher interest rate.

Now considering that RBS had admitted their error and offered £4500 compensation 18 months earlier and the difference in interest over the 2 year fixed term was almost £10,000 then the decision appears unfair.

I am seeking advice on whether or not I should accept the FO's decision. If I don't accept it I need advice on the correct course to take this case to the courts. I live in Scotland.

[bluebottle]

Re: RBS apply erroneous default and compromise mortgage application

You need to speak to an attorney or advocate familiar with Scottish Law, Magrew. My background is in English Law.

[Magrew]

Re: RBS apply erroneous default and compromise mortgage application

Thanks for the reply.

Do you know if the ombudsman would have considered matters under Scots Law? I was wondering if it would be more appropriate to appeal the ombudsman's decision. He appears to have misled himself.

[Guest]

Re: RBS apply erroneous default and compromise mortgage application

HI
I find this a little hard to understand, you say that RBS offered you a loan even though you had defaulted on an earlier one (according to their records), why would they do that?
D

[Magrew]

Re: RBS apply erroneous default and compromise mortgage application

It wasn't simply a loan they offered me it was a rather large mortgage and it was in January 2009 when it was tricky to get any mortgage unless your CR was totally clean. I hadn't defaulted on an earlier loan, they had claimed that I had in error. In January 2009 I could not find the paperwork to prove that they were wrong, it had been mislaid because I had moved home 3 times over the previous 18 months.

The paperwork did turn up later that year and I presented it to RBS, then they admitted their error but obviously they had this paperwork on their records but had remained silent to that fact when I raised my first complaint. There was no hiding when I produced my copy. They obviously were happy to offer me the loan the previous January because internally they were aware that I had not defaulted. After admitting their error they offered me compensation of around £400.

The problem was because they had remained silent and not removed the erroneous default the only mortage provider who would talk to me was RBS, the others wouldn't touch an applicant with a recent default. This left me with one mortgage option at 4.29% when the wider market was offering as low as 1.99%. RBS themselves were offering 2.49% for direct applications rather than going through a broker, I had elected to use a broker to negotiate the complication of the default with underwriters. The difference in interest over the period of the 2 year fixed term was almost £10,000.

I raised my complaint to the ombudsman seeking redress over the differnce in interest rates due to the fact I did not have access to any other provider than RBS due to their erroneous default. They agreed that the default was in error but said that I was only entitled to £300 compensation.

Their is no doubt that the default was in error, I did nothing to earn it and RBS had slapped it on with no justification whatsoever, it has so far cost me over £10,000 in additional interest but the ombudsman thinks that is ok. I am simply flabbergasted.

I was looking for an opinion if I am likely to have any success with this in court following the ombudsman's decision.

[SpringerSpaniel]

Re: RBS apply erroneous default and compromise mortgage application

The Ombudsman is in London so English law applies to his decisions, which can be challenged by way of Judicial Review eg on the grounds of unreasonableness.

[Magrew]

Re: RBS apply erroneous default and compromise mortgage application

What angle would you focus on to demonstrate that this decision was unreasonable?

[miliitant]

Re: RBS apply erroneous default and compromise mortgage application

Durkin v DSG & HFC is headed for the UK Suoreme Court over specific damages on damage to credit worthiness.
The Court of Session (Scotland's highest court) has confirmed £8K simply for general damage to creditworthiness is the norm - based on Kpohraror v Woolwich, King v British Linen and Wilson v United Counties Bank. It has force in the whole of the UK.

The wording can be very simple. in a claim for damages

Something like: The pursuer claims £5K (or whatever small claim max is) for general damage to creditworthiness as has been accepted by the Court of Session in Durkin v DSG & HFC and the expenses in raising this action.


you can claim the difference on what the credit offer would have been without the default,( how much in monetary terms the default has cost you)

you then claim damages as to your tarnished credit worthness as extra

[Magrew]

Re: RBS apply erroneous default and compromise mortgage application

Am I correct in my interpretation that you are saying I could raise an action to the small claims court referencing the above authorities and they have to, by set precedence, follow the path of earlier decisions?

Do I not have to demonstrate the damage and the consequences?

[labman]

Re: RBS apply erroneous default and compromise mortgage application

You say, "I was looking for an opinion if I am likely to have any success with this in court following the ombudsman's decision."

I imagine the answer would be you should certainly be able to make a good case in court as you have suffered genuine loss as a result of the erroneous default.

There are things you could have done to bring this out earlier, such as a SAR to the bank in question. However, if they had temporarily mislaid the information, the proof may not have been included in any case.

It would be worth your while perhaps talking to a solicitor who offers a free initial consultation to ascertain their views on this.

[miliitant]

Re: RBS apply erroneous default and compromise mortgage application

if you bring a claim to the courts then you will need to do a schedule of loss to the penny on the total loss you have suffered as a result of this negative default

as stated, you need to do an sar to get all statements,payments,interest payments,etc,etc

i would talk to a solicitor who will no doubt liase with an accountant but

GET THE SAR IN AS THEY HAVE 40 DAYS TO COMPLY AND WILL DRAG IT OUT

[Magrew]

Re: RBS apply erroneous default and compromise mortgage application

There are things you could have done to bring this out earlier, such as a SAR to the bank in question. However, if they had temporarily mislaid the information, the proof may not have been included in any case.

What does SAR mean?

[Guest]

Re: RBS apply erroneous default and compromise mortgage application

HI
Yes you are correct you would have to show consequential loss.

Were the losses you incured directly caused by the action of RBS, they would say not, they would say you chose to take out the loan under the stated terms.

You would have to show that you had no option but to take the course of action you did because of their error.

The case law quoted earlier in this thread all turn on the fact that the losses were direct and unavoidable consequences of the creditors actions.
D

[labman]

Re: RBS apply erroneous default and compromise mortgage application

Subject Access Request under the Data Protection Act 1998. You write to the organisatioin, and they have 40 calendar days (not working days) in which to respond. Allow 2 days either end for post, so you should receive a reply within 44 days of posting the request. It costs a maximum of £10.00, and 99% of institutions charge this. Payment should be included in the letter. The template below can be adapted as necessary:

DATA PROTECTION ACT 1998
SUBJECT ACCESS REQUEST

Date: xxxxxx

Dear Sir/Madam
Name xxxxxxxxxxxx
Account No’sXXXXXXXXXXXXXXXXXX


I understand that you currently hold details of my personal and financial information within your internal record systems with regard to personal loan accounts and credit cards accounts

I would be grateful if you would provide the following for ALL accounts or associated accounts I hold or have held with your organisation:

1. Full copies of all contracts which you believe exist or have existed between myself and your organisation, including true copies of any documents you hold in support of the same.
2. A complete list of all transactions or statements relating to ALL of my Loan Accounts with your organisation.
3. Copies of all documents which include any of my personal information including copies of any contacts or invoices, emails or computer records containing my personal information, or any records which pertain to this information.
4. Full copies or transcripts of any correspondence in postal, email or any other format which you have entered into with any individual, organization or third party which contains my personal or financial, or which pertains to me.
5. Where any previous information or records held have been deleted or disposed of, the methods used to do so, including dates, certificates or references confirming details of destruction. Where you are unable to provide such certificates, please provide a declaration, signed by an authorised officer of your company, confirming the dates and methods of destruction of this data.
6. Full hard copy print outs of my personal or financial information, held in a digital, magnetic or any other format which is held in any archives, backups or other storage devices / locations.
7. Underwriting sheet or other such document recording any commission (or other) payment made to an intermediary or packager, and/or payment/commission from the insurer in relation to my account.

Where you have used abbreviations and/or codes, I would request that an accompanying sheet be provided so as to translate these abbreviations and/or codes and their meanings, I also request an accompanying appendices of the documents included and reference to the purpose or meaning to those documents.

I request that you provide all the information requested above, even though you may consider that it falls outside Data Protection.

I reserve the right to refer to the contents of this letter if an application for pre-action discovery is necessary relating to any of the documents requested herein.

I enclose a cheque in the sum of £10 to cover your fee.

IF YOU ARE UNABLE TO DEAL WITH THIS REQUEST, YOU SHOULD IMMEDIALTELY FORWARD IT TO THE PERSON WITHIN YOUR ORGANISATION RESPONSIBLE FOR DATA PROTECTION.

I look forward to hearing from you in the first instance of receipt.

Your Faithfully.

[Magrew]

Re: RBS apply erroneous default and compromise mortgage application

I understand that you currently hold details of my personal and financial information within your internal record systems with regard to personal loan accounts and credit cards accounts

I have only ever had mortgage accounts with RBS (and their subsidiary "the oneaccount") should I change the end of this sentence to say "with regard to mortgage accounts"?