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FCA orders Kensington to change ‘unfair’ mortgage terms

The FCA has ordered mortgage lender Kensington Mortgages to change a number of policy terms affecting 7,000 Money Partners customers over concerns they were unfair.

In a notice of undertaking published today, the FCA says a number of terms in Kensington’s 2004 Money Partners mortgage conditions booklet are “likely to be unfair”, as they provide the lender with too much discretion.

The terms allowed Kensington to demand full repayment of the outstanding mortgage immediately if there was failure to pay a single monthly payment or any other money was due, however small; any term was breached, however minor; or there was a change in customers’ circumstances.

Money Partners was established in November 2004 as a joint venture with Kensington, and was sold by Kensington to Goldman Sachs in January 2008. Money Partners suspended new lending in February 2009.

Kensington stopped applying the 2004 conditions to any new customers from 2007, and has agreed to apply its new terms to all existing customers. 

The new terms state that Kensington may demand immediate repayment of the debt if the customer has failed to make payments equal to two monthly payments or more, or is in breach of particular obligations and has failed to remedy the breach.

The FCA says Kensington has also agreed that two of the terms were not in plain language.

The regulator says the terms did not clearly explain what would happen if one of a pair of joint borrowers died, and when the firm is able to make changes to a customer’s monthly mortgage payments.

A spokesman for Kensington says: “We have agreed with the FCA to change a number of terms in the Money Partners Limited Mortgage Conditions Booklet 2004 to make them fairer and clearer for customers.

“Mortgages completed by Money Partners were assigned to Kensington following their completion, but remained subject to the original Money Partners Mortgage Conditions.

“The terms that have been changed were never imposed by Kensington and the revised terms now reflect how Kensington actually operates in practice.”

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