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GLC is today publishing a successful decision of the Financial Ombudsman Service where our client, a Scottish homeowner, obtained a refund of £1,500 from Santander UK plc with respect to half of the legal expenses he was charged in a mortgage repossession case.The legal background
The case concerns a lender who had raised mortgage repossession proceedings in Scotland where the borrower had got into arrears of his mortgage but the case had to be dismissed from court as it was incompetent standing the ruling of the UK Supreme Court in RBS v. Wilson [2010] UKSC 50. The lender then had to re-raise proceedings in court.
The legal expenses for the incompetent case came to £3,000, and the Ombudsman has ruled that it was neither the borrower or lender's fault the case had to be dismissed following the UK Supreme Court decision which changed what everyone understood the law to be, and 'it seems fair, under the circumstances, for the cost to be shared'.
In paragraph 18 (opens as PDF) of the CML's response to the Scottish Government's consultation on the RBS v. Wilson case, the CML estimated between 3,000 and 5,000 repossession actions were dismissed in Scotland as incompetent, standing Wilson. Taking an average expenses figure of £1,500, we may be looking at a figure of £7.5m due to be refunded to consumers in Scotland based on the attached Ombudsman's decision.
And there are then the cases dismissed as incompetent following Govan Law Centre's (GLC) NRAM v. Millar and RBS v McConnell 2012 SLT (Sh Ct) 58 test cases, in relation to a failure to comply with the Pre-Action Requirement statutory provisions.
We are not sure of the approximate number of cases dismissed because of these cases but the number is not insignificant. Again, applying the rationale of the attached Ombudsman's decision we may be looking at around £3m, producing an overall figure of in the region of £10m of costs which consumers in Scotland may be able to have refunded.
What does this mean for you?
If you were taken to court for mortgage repossession in the last few years and the court proceedings had to be dismissed or re-raised on competency grounds, then you may well be affected by this issue, and may entitled to a refund of at least 50% of the legal expenses in one of those cases. You can speak to your solicitor or advisor to check whether you may be able to claim.
If you already think you are affected by this issue then you can write to lender asking for a refund yourself - here is an illustrative letter (keep a copy of this letter too for your own records and in case you need to prove you made a complaint).
Your lender has 8 weeks to deal with your complaint, and if they are unwilling to offer you a refund you can then make a complaint to the Financial Ombudsman Service, details on how to do so are set out here: http://www.financial-ombudsman.org.uk/consumer/complaints.htm
* For the sake of completeness, GLC did invite the Council of Mortgage Lenders (CML) and its members to make arrangements for voluntary refunds, where appropriate, but this suggestion was declined by the CML who insisted that their members were entitled to recover full legal expenses even where incompetent legal proceedings had been raised and were required to be dimissed by the court.
