HSBC Bank is accusing the Financial Ombudsman Service of overlooking fairness and consumer interest after it lost a ruling about its two-tier mortgage rate strategy offering lower rates to new borrowers.
The ombudsman found one of the bank's existing discountrate clients had been discriminated against as they were prevented from switching to a new lower rate offered to new borrowers.
HSBC says it will comply with the ruling concerning this client but says it does not set a precedent and it has no plans to make general changes for its 30,000 customers on its discounted standard variable rate mortgage terms.
The bank claims the Omb-udsman's decision that the borrower paying 4.49 per cent on its old standard variable rate should be linked to the new rate of 3.5 per cent was based on a technical interpretation of a clause in an individual loan agreement.
But London & Country mortgage broker David Holl-ingworth warns that HSBC could be forced into making the change more wide-ranging if it is flooded with time-consuming and costly complaints.
However, the only way the ombudsman's decision could become a general rule is if the OFT or FSA steps in. Such a move could also affect Halifax, Abbey National, Nationwide and Cheltenham and Gloucester which are all facing similar challenges before the Ombudsman.
Wriglesworth Consultancy director John Wriglesworth says: “This is based on legal precision as opposed to common good brought about by greedy customers who want to have their cake and eat it.”
An FOS spokeswoman says: “Quite often, firms apply our decisions to other customers as we are likely to make the same ruling in similar cases. We understand that HSBC has decided not to do this although this is now our final decision.”