Halifax £500m in compensation

Halifax mortgage borrowers £500m in compensation 

Halifax is set to pay mortgage borrowers a total of £500m in compensation after it failed to inform 600,000 customers that it was increasing the cap on its standard variable rate (SVR) – the rate for borrowers who are not on a special offer. It expects to make payments to around 300,000 of these people.

The following Q&A explains which borrowers will benefit and what they have to do. 

  

1. Does this affect me?

 

If you took your Halifax mortgage out following receipt of an offer between September 20 2004 and September 16 2007, you will have received a mortgage offer that had a summary of the cap on the SVR.

If you remained had the same mortgage on January 1 2009, you are affected and will be sent a letter during April. The content of that letter will depend on your individual circumstances.

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2. Will I get a goodwill payment and how much will it be?

 

Halifax said it could not yet confirm how individual customers would be affected. It said customers did not need to take any action at this point. If you are affected, the letter will explain whether or not a payment will be credited to your mortgage, and what the value of that payment will be.
The money individuals will receive will be based on the difference between repayments if the SVR had been 2 percentage points above Bank Rate and the 3 points above Bank Rate that it was charged at.

3. How will Halifax decide who gets a goodwill payment?

 

Payment will be made to customers who received a Halifax mortgage offer between September 20 2004 and September 16 2007, and have been paying the SVR at any point since January 1 2009.

4. What if I want to transfer to a new product now? Will I lose any entitlement I might have to a goodwill payment?

 

No. If you are entitled to a goodwill payment, transferring to a new product will make no difference.

5. What about affected customers who have now left the Halifax?

 
These ex-customers will also receive a letter from the bank.


6. Why did Halifax increase the SVR cap?
 
It changed the cap in October 2008 because of significant increases in its cost of borrowing the money it lent to mortgage customers. It said the mortgage terms and conditions allowed it to do this.

7. If I’m entitled to a goodwill payment but my mortgage is in arrears, will I still get it?

 
Arrears won’t stop you receiving a payment but any sum you do get will reduce the arrears balance first.

8. How can I find out more?

 
Halifax said customers with further questions could call 0800 1412146.

9. What about other companies in the same group as Halifax?

 
Halifax is part of Lloyds Banking Group, which includes brands such as Lloyds TSB, Birmingham Midshires, Bank of Scotland, Intelligent Finance, Scottish Widows Bank and the AA. A spokesman said customers of all other brands within the group were unaffected; the problems with the SVR related only to Halifax-branded mortgages.