Shortfall worries? Please view (and review) this response to the govt's Mortgage Code Review. : LUSENET : Repossession : One Thread

Further to a couple of previous posts:

The government want responses to the Banking Services Consumer Codes Review's 7 key questions on the functioning of the Mortgage Code. I've put a basic (possible) outline together, which is below. You can see from this the direct relevance to many 'shortfall' cases.

I'm thinking that it would be good if we could submit a response as a group. If people would like to add their own comments and amendments over the next couple of days, I'd be happy to collate them and produce a summary document to go to the Treasury (who are dealing with this).

We have till 28th Feb.



FAO: Banking Services Consumer Codes Review Group

These comments relate specifically to the Mortgage Code.

1. Is the consultation process of drawing [the Mortgage Code] up satisfactory?

No. The codes need to be drawn up using a much broader range of sources. Input from users' and victims' groups, for example, would be welcome. While such groups cannot of course dictate the contents of a code of practice, they could usefully highlight existing gaps in the Code's provisions and discuss examples of lenders' poor practices authoritatively.

2. Do they cover all the issues that they should?


The Mortgage Code essentially applies to new business and existing mortgages, but some major lenders conduct a great deal of 'business' with ex borrowers which is, therefore, neither regulated nor monitored.

Specifically, there is no code of conduct for banks' behaviour with regard to old mortage accounts, notably mortgage shortfall 'debt' recovery on older repossessions.

For example, some of the 'business' which lenders conduct with ex borrowers is the resurrection of alleged mortgage shortfall 'debts' which were effectively written off many years ago, often by building societies whom the lenders took over in the 1990s. The building societies released the mortgage deeds, disposed of original records such as valuations, and clearly had no intention of ever pursuing 'claims'. Ex borrowers are now being contacted by lenders, and, despite the fact that the lenders have no way of ever proving these 'claims', or demonstrating their accuracy and legal validity to the ex borrowers, the lenders are pursuing a policy of pressuring vulnerable ex borrowers into making large 'settlements' on unproven and unproveable 'debts'. The ex borrowers are offered no protection by the Mortgage Code.

3. Are they full complied with by the industry?


MPs are rightly concerned. Forty-two thus far have signed an Early Day Motion (EDM 62), sponsored by Mike Hancock MP, on this issue:

"EDM 62 DEBT RECOVERY 07.12.00 Primary Sponsor: Hancock/Mike That this House denounces the unacceptable tactics used by lenders, specifically Abbey National Bank, to try to force settlements on debts which they will not properly substantiate; notes that such tactics breach the Mortgage Code while lenders are not being held to account; condemns mortgage shortfall debt recovery by lenders like Abbey National Bank many years after repossession; and therefore calls upon the Government to take the necessary steps to ensure borrowers are given the protection they deserve from lenders intent on maximising their profits at any expense."

I understand that Mike Hancock, Geraint Davies, Nick Harvey, Bob Russell and Tony Benn are just the latest MPs to 'take on' lenders on behalf of constituents.

The Mortgage Code notes that the lenders will comply with the law and with relevant codes of practice (10.1), but these codes do not include Civil Procedure Rules.

The Mortgage Code states (14.2) that it will explain to customers that 'you have the right of access under the Data Protection Act 1998 to your personal records held on our files', but fails to add that these records do not include those held on paper, microfiche or microfilm, and that banks will therefore refuse to supply it.

The Mortgage Code states (14.1) that 'we will treat all your personal information as private and confidential (even when you are no longer a customer)', but fails to add that banks will pass it firms of debt collectors, lawyers and private investigators without your knowledge or consent, and without trying to resolve the problem directly with you first.

The Mortgage Code states (15.1) that members have 'internal procedures for handling complaints fairly and speedily', but in 'shortfall' cases this seems to involve merely the rapid issuing of a 'deadlock' letter. Given the lack of documentation with the ex borrower has been (and indeed can be) provided, there is little chance of the ex borrower putting a case together for the Ombudsman within six months. Indeed, it is unclear whether or not these cases fall within the Ombudsman's jurisdiction, and how effective the Ombudsman can be in assessing old building society accounts for the the documentation is incomplete.

4. Are they monitored and enforced effectively?


According to the Council of Mortgage Lenders (CML) a lender is, under the Mortage Code, obliged to furnish the ex borrower with proper evidence and proof of its shortfall claim, but yet the CML is not at all interested in pursuading the lenders to comply with this requirement. It relies on the ex borrower to jump through hoops to enforce the CML's Mortgage Code, by suggesting that, for example, the ex borrower should in the first instance take the matter up with the Banking Ombudsman.

But is the Banking Ombudsman impartial? A registered company, it comprises bankers judging bankers. Other issues give cause for concern. The Banking Ombudsman is refusing to grant tribunals to those who ask for them, in contravention of his duties under the Human Rights Act (ECHR Article 6). On top of this, as the Treasury Select Committee knows, there a worrying amount of complaints about Ombudsman decisions being made to the Financial Services Authority (FSA).

5. Do they offer adequate redress for legitimate grievances?

No. See 4, above.

6. Could consumers be better informed about what their rights are?

Yes. See 2-4, above.

In addition, consumers need to know that their rights under the Human Rights Act 1998 (HRA) have been factored in. For example, the HRA, as the Chief Ombudsman Walter Merrick acknowledges, gives consumers the right to insist upon a tribunal hearing. Not only is this not widely known, but there is considerable resistance being shown by the Banking Ombudsman to the incorporation of this basic right into its practices.

7. Do customers need more information or more clearly presented information?

Yes. See 1-4, above.


-- Eleanor Scott (, February 24, 2001


This Mortgage & Banking review has to be responded to. This is a very good basis for a MSSG/Home-Repo group reply and I for one give it my vote.

But everybody should also send in their own copy as a personal statement as well.

-- anon (, February 24, 2001.

That's right. You can email your own personal responses directly to:

Please do this by the 28th February 2001. Thanks.

-- Eleanor Scott (, February 25, 2001.

Thanks for all your hard work Eleanor.

-- (, February 27, 2001.

You're welcome! And thanks to all for the emails of support. I have submitted a response to the Treasury. Thanks again,

-- Eleanor Scott (, February 28, 2001.

There appears to be a missing link in all these reports. mention is given to the Banking Ombudsman and in some cases the Building Societys Ombudsman,yet many lenders are and the old ones were or are still not members of either!

Mention is also given to the EDM looking through it were are the Conservative MPS? after all they were in power when all this started and infact rescued many lenders in trouble or gave them a helping hand! Perhaps a letter or Email to Conservative Central office would not go amiss? and see what they have to say!

its no use fighting as indians without the cowboys! when on the campaign trail you must include all the rest! Charles Twford

-- charles twford (, March 01, 2001.

I agree with you Charles, the Conservatives are conspicuous by their abscence but it's not for the lack of trying. I personally have emailed several Tory MP's and written to Mr Hague to no avail. Not even an automated * Thank you for your letter ^. So I guess they don't agree with us, or they are burying their heads in the sand, because they know damn well that they contributed to the crisis in the late '80's early '90's. J

-- jacky jones (, March 02, 2001.

The Best Place to Live The strength of our communities, our years of unbroken democracy and rule of law, our wonderful countryside, our extraordinary cities, all these things allow us to aspire to this status. Britain needs a very different approach. Britain needs a Common Sense Revolution. The next Conservative government is going to listen to this common sense. It will interfere less, so that it can do better at the simple things people are desperate to see put right.

When you go to the Conservative Website and read the above by William Hague and the last part about people deperate to see put right.

Yes Jackie totally agree with you and the work you have done in trying to contact them -perhaps we should all go there website and highlight it and email William Hague or more like William Vague!!!!! will he listen will he take note will he care and does he really care!

We are the electorate and we have suffered all on this website and like Jackie has tried it is the height of ignorance not to reply!

so we should all email the party and there mps and see what happens for should they be elected-what chance do we all stand?????

Charles Twford

-- charles twford (, March 02, 2001.

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