Law firm probes Skipton SVR hike
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Law firm Leon Kaye has launched an investigation into the legal implications of Skipton Building Society’s decision to scrap the ceiling on its standard variable rate.
Money Marketing first revealed last month Skipton’s move to scrap the ceiling rate on its SVR, which had meant that borrowers would not pay more than 3 per cent above the base rate.
The building society blamed “exceptional circumstances” for removing the ceiling.
A statement on Leon Kaye Solicitors website says that such clauses are normally built in to contracts to ensure the lender has some control but it is investigating whether Skipton could be in breach of the Unfair Contract Terms Act 1977.
Liberal Democrat Treasury spokesman Lord Oakeshott has urged borrowers to write to the FSA over Skipton’s move, according to MoneySavingExpert.com.
Leon Kaye Solicitors’ statement says: “Those borrowers who cannot switch mortgages will be exposed to significant increases in their interest payments despite taking out an SVR for added protection against such rises in the interest rate.
“We are currently investigating the legal implications of Skipton’s decision to not honour the guaranteed rate and whether the downturn in the economy would warrant a trigger of the ’exceptional circumstances’ clause pursuant to the terms of the mortgage contracts.
“Furthermore we are investigating borrowers rights regarding these clauses under the Unfair Contract Terms Act 1977 with a view to establishing whether borrowers have a claim against Skipton.”
Lord Oakeshott says: “Skipton mortgage holders who signed up in good faith have every right to feel cheated by what has happened.
“I would advise mortgage holders who have lost out through this move to write to the FSA in the first instance and get their view on whether Skipton has acted properly.”
A Skipton Building Society spokeswoman says: “As a responsible business we are in constant dialogue with our regulator. We are not aware of any formal challenge being made but if one was to arise we would deal with it through our normal procedures.”
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