HALIFAX – a little extra to cost £500 million
If you took out a mortgage from Halifax between 2004 and 2007 you could be in line for a windfall payment of around £2000.
Lloyds TSB – which now owns Halifax – has announced that it is to pay up to £500 million to 300,000 mortgage customers who were sent a misleading offer letter.
It said “We have set a limit on the Halifax Standard Variable Rate so that it will not be more than 2% above Bank of England base rate.” Naturally many people thought that meant their mortgage rate was capped. And when it rose to more than 2% above the bank rate in January 2009 some complained.
In fact very few Halifax mortgage customers had a cap on their rate. It was just a mistake missed by the teams of people who check such things.
The error was discovered when the Financial Services Authority did one of its regular checks. Lloyds decided it had to act quickly and decisively to avoid a hefty fine and the reputational damage that would cause.
So everyone who got that letter will be written to – a total of 600,000 people. About half who in fact lost nothing will just get an apology. Another small group who did not lose but might have done will get a fixed payment of £250. But the rest – nearly 300,000 – will be fully compensated. They will get a payment for the difference between the mortgage interest they actually paid and the amount they would have paid if they had been entitled to the capped rate the letter appeared to promise.
Amounts will vary but probably average around £2000. Because the bank has not been fined or forced to act by the Financial Services Authority it prefers to call the money ‘customer goodwill payments rather than the more normal ‘redress’ or ‘compensation’.
Lloyds says the customers affected do not need to do anything. But that may not be completely true. It will write to all 600,000 customers starting in April. But inevitably it will have lost track of many people who are no longer customers and have changed address.
So if you took out a mortgage with Halifax between 20 September 2004 and 16 September 2007 and you do not hear from Lloyds in April then you should contact the bank and register your claim to the compensation – sorry, goodwill – payment.
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