HALIFAX TRIES TO HANG ON TO COMPENSATION
Halifax has changed the way it will pay £500 million to 300,000 mortgage
customers. Instead of sending them a cheque it is simply reducing the amount of
their loan. Although customers can ask for the money by cheque by calling the
number no the letter, the default option is simply to credit it to the mortgage
account. And the letters sent out make no mention of the availability of the
cash option. It simply says
“we made a goodwill payment of £xxx and credited it to your mortgage
account.” To find out that they can get the money in cash customers have to go
to the Halifax website and read all the options. Not many would bother.
The compensation is due – as I reported here three months ago – because
Halifax misled 300,000 customers who took out a mortgage between 2004 and 2007.
The offer letter said that the mortgage would be capped at no more than 2% above
the Bank Rate set by the Bank of England. In fact no such cap was in place. And
the compensation is the difference between the capped rate they thought they had
and the non-capped rate Halifax meant them to have.
Halifax announced the compensation after a visit by the Financial
Services Authority. It made no mention of how it would be paid so the assumption
was that 300,000 people would get a cheque averaging about £1700. Many would get
a lot more. A few would get as little as £250.
But now Halifax has decided that it would be easiest – and of course
cheapest – to simply reduce the mortgage debt. For many people, of course, that
will be the best option. Reducing your mortgage debt is always a good idea if
you can. But people who have other more expensive debts such as a credit card or
loan would be best advised to use the windfall to reduce or pay off that debt.
And others who have a big expense coming up would be better to use the Halifax
payment rather than borrow money to meet the cost.
So if you got the Halifax letter in April or May call the number in the
last paragraph and politely explain that you would like your money in cash
please. Halifax tells me the cheque really will be in the post then.
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