Outraged Abbey National
Well, outraged Andrew Pople anyway. Pople is Abbey National's managing director of retail operations (that's "mortgages" to you and me) and he's spitting angry about the way other mortgage lenders are ripping off customers. Pople objects to the way lenders impose "extended lock-ins" or fines on customers who buy discounted mortgages or other special mortgage deals and who then try to swap to a cheaper mortgage. Pople's view, - as reported by the Daily Mail and the Saturday Times - is that lenders don't tell customers about the penalties and "hide" them in the mortgage contract small print.

There's no doubt that many customers are caught out by this and there's no doubt that lenders' own sales staff often fail to point out the clauses to potential customers. We ran the story a few weeks ago of the Cheltenham & Gloucester manager who simply denied that there were any lock-ins on a mortgage that two undercover reporters pretended they were interested in. But I'm at a loss to understand why the Abbey National has so suddenly come out against lock-ins - and why it is so keen to be seen naming and criticising other lenders. That's an uncommon way of winning customer favour in any type of business and seems especially out of character in the conservative world of British mortgage lenders.

If I were cynical I'd almost be inclined to suggest that Pople and Abbey National want to show that the industry is capable of self-criticism.

I'd be inclined to suggest that they want to make a very public show of the industry policing itself just as the Government starts to investigate mortgage malpractice.

If I were cynical, I'd suggest that with an ongoing review of the Mortgage Code, now would be an ideal time to set up a high-profile demonstration of the industry's ethics.

But that's if I were cynical. After all, I'd have to show some evidence... and the only evidence I would be able to put up is my own view that the [sterling]250-450 that the Consumers' Association believes lenders earn from each locked-in mortgage is relatively low compared to the sums they earn from selling insurance and endowment policies.

I'd say they look like an easy, cheap sacrifice to make in the interests of being able to look as though you are capable of policing yourselves.

I'd ask why Pople is emphasising lock-ins but not endowments. Why he is emphasising lock-ins rather than insurance? Why lock-ins rather than, say, administrative charges? Or unsubstantiated shortfall claims. Or, heaven forbid, poor customer record management?

Perhaps because they don't earn lenders that much money and look likely to be banned by law anyway.

Consumers' Association to sue lenders
The Consumers' Association has given notice that it will name every mortgage lender and sue them all over extended lock-ins. The Office of Fair Trading has given its blessing to the Consumers' Association ultimatum, which essentially says that lenders should drop lock-ins within the next two months or face a court battle.

Presumably, the Office of Fair Trading has given its blessing because the Consumers' Association is saving it from having to do anything itself. Indeed, you can't help wondering if Pople's sudden criticism of lenders is a sign that he has seen which way the wind is blowing. Strange how everybody sees the light years after consumers suffer...

The Consumers' Association will argue that lock-ins are an unfair contract term because they tie you to a rate that is at the lender's discretion. More importantly for anyone who has had to pay out to a lender because of a lock-in, the Consumers' Association is hoping it can win compensation for those who can prove they have been financially damaged by these clauses.

Police wake up
Scotland Yard has been hearing that regulators in the insurance industry tipped off insurance companies before they were raided. That's actually an old claim... for some time there have been rumours and some evidence that regulators have shown too much deference towards the companies they were supposed to have been supervising.

Now Scotland Yard has produced a confidential report that (and I'm choosing my words carefully here) includes claims by former salesmen from insurance companies who allege they were told to give customers advice to buy inappropriate endowment policies.

The Sunday Times reports that detectives have asked former salesmen to give evidence against their bosses. According to the Sunday Times, they worked for Legal & General, Prudential, Allied Dunbar (known as Allied Crowbar in the trade, by the way) and Guardian Royal Exchange.

A salesman from one company said his bosses told him to burn customer records that might contain incriminating evidence of mis-selling. Guardian Royal Exchange and, to a lesser extent, Legal & General, are regular visitors to the Home Repossession Page.

Changes to the Home Repossession Page
Following a distraught email from a reader I have added Abbey National to the list of lenders about which readers can tell their "Bad Mortgage Experience" tale. I'll add others when I get the time, but if anyone wants me to add others sooner rather than later, feel free to email me at repossession @ bigfoot.com.

[ends]

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