The pricing strategies of Nationwide and Halifax are under investigation by the Consumers’ Association, following complaints that customers with discount mortgages are not entitled to move onto the same low mortgage rates that other borrowers are benefiting from.
Rate cuts across the industry have allowed the majority of new and existing borrowers to move to lower rates, but many existing borrowers remain ineligible, tied to discount products until the redemption period is over.
An inquiry, headed by the Consumers’ Association, is currently underway to establish whether the lenders are acting unfairly. ‘The situation is that we have had a number of complaints from members and we are working with all parties concerned, including the Financial Services Authority, to reach a general agreement. The Unfair Contract Terms Act allows us to reprimand companies that are believed to be acting unfairly and we can, in theory, take them to court. But we are working together to discuss the issues and hope to come to an agreement as soon as we have more concrete facts,’ said a spokesperson for the Consumers’ Association.
Jennifer Stoddart, senior press officer at Nationwide, said that it hoped the investigation would pass over, but was keen to take on board any suggestions that the association may put forward. ‘We have had some productive meetings with the Consumers’ Association in respect of our pricing strategies. We explained that we do have the best motivation at heart and intend to give all our customers the best value in a fair way. It would be good to get the association’s approval on our strategies, but we are also willing to listen to and take into account any views that they may have,’ she said.
Alison Kellington, senior press officer at Halifax, said that the lender would continue to defend its pricing strategies throughout the investigation. ‘We looked carefully at all the implications to borrowers on discount mortgages before we introduced the lower SVRs. In our view, it is not unreasonable that customers should have to abide by conditions that they signed at the beginning.
‘The association feels obliged to look into pricing because of the complaints they have received. But, we remain firm in the stance that it is only right that customers stay with their deals until the end of the term, or pay redemption penalties, as agreed. Hopefully, the association will listen to our views and recognise that we are within our rights,’ she added.