Please see thread with GMAC / RFC as well. Just to let you know that the case was heard on 20th aug in county court and I lost - the claim as stated above was struck out as it has no prospect of success. Costs awarded against me of £7750 - they claimed 14,356.15. They did offer to settle for costs before. After I refused, they tried to intimidate me by sending the schedule of costs on the morning of the hearing which was in legalese so utterly unintelligable, the columns did not even add up. But the judge said he understood it and thought it was a little excessive. Though he did award only a % , I think they got away with puffing it out and I am not sure if there is anything I can do about it now. On the allocation Q, they indicated costs of £4300 to date (jan 07) with further costs to be notified for an economic expert. Then it appears they went to the moon to provide a defence for a case they believed had no merit, with a partner, associate solicitor and solicitor all spending hours and hours on it as well billed time from counsel. I know the risk I took on and I am happy to face the responsibility. I feel lucky that I can face this head on (on an installment basis) with some changes to my lifestyle. I am just really really annoyed that they can get away with such tactics and costs. I offered them and installlment payment plan, but they still went to court again to get an order to attend court for questioning which was on 13th nov. That was no problem, I think the court officer was a little surprised by their action. Have made a formal payment offer via the court and am waiting to hear. But of course the debt has increased £130 since judgement on 20th. I would love to know if there is anything I can do about getting the court to re assess the costs they claimed, it is so very irritating. GE money are gangsters!

Forgot to say GMAC RFC did make an £5,500 offer of settlement before the hearing on 20th aug. which I rejected! as a matter of principle. I really really really wanted a judge to look at all the arguements and make a judgement. I must say that I thought the judge tried to be fair, it was me and two lawyers for GMAC & GE money who joined together in an application to strike out the claim and they did blind me with legalese...... However, I was really disappointed that he did not seem to percieve the injustice, viewing the matter from an entrenched position within the established status quo, as though there could be no possible circumstances in which the banks could be found wanting because they are after all banks!

Sorry to have been away so long. Just to let you know that the case was heard on 20th aug in county court and I lost - the claim as stated above was struck out as it has no prospect of success. Costs awared against me of £3415, though they tried to claim £6115. Am very lucky because this will not break me. I don't have the money and they cannot take what I do not have. I have made them an offer of payment in a lumpsum, followed by an installment plan and am waiting to hear. Am thoroughly gutted of course which is why it took me so long to update you. BUT I still believe that the economic analysis shows the injustices heaped upon mortgage 'customers' in the UK and though I failed to present a cogent legal arguement for those circumstances in court, it does not mean one does not exist or that we should all fall away. I believe the banks are being exposed for their rotten practices and we must continue to put pressure on them in any we we can.

Sorry for the silence.... Initial hearing took place on 16th July, when Judge made an order for Defendants to re submitt a defence. The one they submitted did not relate to my account. In this case, the judge wanted to know the cost of the discount on my mortgage VS the ERC charge. I haven't been able to agree the amount of the discount with BofS, but after much tooing and frooing, they have submitted a new defence statement and we are due in court again on 26th nov. To summarise their defence: Limitation - they are claiming the claim is out of time according to the 6 year limit UTCC 94 & 99 - Does not apply to ERC. But in the event UTCC does apply, ERC directly relates to the actual price of the product so UTCC does not apply and terms are not subject to an assessment nor does a presumption of unfairness arise. Even if ERC did apply, the whole circumstances whereby the claimant agreed to take out a mortgage would be taken into consideration and the following circumstances in which the claimant entered into the mortgage do not render the ERC unfair should it be subject to an assessment: a) The claimant was aware of the terms of the mortgage prior to entering into the mortgage b) Terms of the product were set out with sufficient clarity as to be clearly understandable and with sufficient certaintly as to enable you to be aware at the outset the amount payable on early redemption c) The claimant would have been free to select other products carrying a lower ERC or another vehicle with no ERC Common Law of Penalties The conditions did not expressly or imipliedly oblige the claimant to retain the mortgage until the end of the discount period, so the early repayment was not a breach of contract, consequently the ERC cannot be deemed to be a penalty and or unenforceable. ERC cannote be considered a penalty as it is a charge designed to cover the cost to the defendant of funding the product on early redemption. It is therefore calculated to compensate the Defendant overtime and on average for the cost of early redemption and as such cannot be deemed to be a penalty or be unenforceable. Any advice much appreciated please.

Hi, No, no news I'm afraid. Still waiting....

Have just sent off an allocaton questionaire to the court.

Got a notice from the County Court. Claim has been allocated to small claims track set for 9th May 2007 at Winchester County Court. Directions for exchange of documents with other party and court and witness statements, to be submitted at least 14 days before the hearing. All original documents to be brought to court. Things have been so hectic since before christmas, I have not kept up to date with the latest developments etc. I will have to do a massive catch up in the next month or so before I decide my next step. Any comments much appreciated at this stage.

Hello folks, My sincere apologies for a long silence. Due to work overseas and lack of facilities en route... Not much to report on this, though I gather there has been rather a lot going on in my absence! Am just taking tonight to go through the threads, then will amend my reponses accordingly. Needless to say, any comments much appreciated. Update thus far: 30/11/06 - All previous paperwork returned by court service, due to some petty bureaucratic tick... Received on 30/1/007 along with Defendant (GMAC's) Defence and allocation Q. Called the courts only to be told the case had been reallocated to Winchester County Court from Northhampton, and they said, no harm done, fill in the allocation Q attached, send a cheque and they will put it through... Am completing the allocation question for dispatch, having previously sent in Claimants statements per threads above. Does anyone know how to get GMAC's allocation questionaire, GMAC's Defence statement and my allocation questionaire attached to this thread somehow.. Many thanks

Thanks very much Zoot. Have added it to my composition and will send it all off on monday. But there will be a bit of a hiatus, as I am going away for work for 2 months from 29/11 til 29/1/07. Have informed the courts in all cases. Shame as have gathered quite a lot of momentum. Not giving up now, so I will have to take it up in earnest in the new year. Best regards and many thanks again

Thank you very much indeed, high praise indeed! Am thrilled!! 17/11/06 - Have now received the court allocation questionnaire. Given the amount £12,389.44 plus costs and interest, they have sent me N150 for allocation to the fast track. I am asking the judge, that notwithstanding the amount, given the nature of the case and in the interests of justice , that we be allocated to small claims or full disclosure is ordered in fast track. Have come up with the following comments. Any advice greatly recieved. I really do not want to end up in fast track. I think I need to add something about the imbalance between the parties....? Many thanks (13.1) Not withstanding the amount , the Claimant respectfully requests that the case be allocated to the Small Claims Track for the following reasons: · The case concerns a petition to the Court to apply existing law to bring the Defendant back to lawfulness. Evidence and arguments from Claimant and Defendant are based on existing law. And extended timetable is not necessary for Parties to gather evidence, make arguments etc. The matter could therefore be judged swiftly under present conditions without extended preparation time or wasteful application of Court resources. · To my understanding, cases allocated to the fast track will generally require only limited 'disclosure'. However as stated in (6.2 and (8.2) above, full disclosure by the Defendant is required in order to judge the true nature of the ERC., this can be achieved by allocation to the Small Claims Track. · Nonetheless, should the Court feel Fast Track is appropriate, the Claimant would ask that the Court makes an order for full disclosure in Fast Track as per (6.4) and (6.5) above.

Hi there, If they are claiming it, then most people pay it then reclaim it back via the county courts. I think it would be dubious not to pay it in the circumstances - I mean that it is only just being established via court claims / rulings that ERCs to the extent charged are unlawful. I would suggest you select all threads for GMAC, spend a few hours reading through diligently, before you decide if you want to plunge in. Banks respond differently amongst themselves and on each case, and it will give you a good idea of their range of response, the processes and risks you would have to go through to claim. If you do, most people have used the following process (all letters etc illustrated in the GMAC threads) 1) Send a priliminary letter to registered address, stating facts and requesting a refund on the basis that it is unlawful (give case references etc), and a response date 2) If they do not reply, send a 'Letter Before Action' LBA after the deadline 3) Issue a county claim If you wanted to, you could try saying if they insist on collecting you will pay, but immediately claim back and put it at the top of a prelim letter. I am sorry there is not abc, you really have to look at how to do it (which is on the site) and if given your unique and personal circumstances, state of mind, time available etc etc, it is worth it to you. Poor you, it is an awful lot of money and I know what I would do, but there are risks with any legal process and you should feel very sure it is what you want to do. It is really worth looking through the 'mortgage' and 'other institutions' threads to see how people started and how they have progressed (start with GMAC threads only under each section). If you need a mentor for the whole process, shout out and someone will respond, and the site runs a court buddy system. The site works on good faith with people helping each other out. Also, do make sure you read all postings by Zootscoot. I didn't sleep for 2 days when I first came across the site!! It was all so alarming and perturbing - how could I have been so stupid? Then a righteous rage kicked in! Good luck.

Technically, I were i to loose, I could be made liable for costs by the judge - but in practice it would be very very unlikely for even an unsuccessful claimant / individual to have costs awarded in favour of a large commercial enterprise. There is an existing precedent (but cannot find the thread, wish we could bookmark messages....). Your are right, there is always a risk, technically, but in practice, I am prepared to take that risk. The banks risk being exposed, I think their risk is more profound. And GMAC are not counterclaiming for costs in my case.

Hang tight and stay strong. The banks have more people going to them for refunds, so to handle the volume etc they may elect to settle early, and credit card charges etc have all been publicly critisised. ERCs refunds are rather newer on the scene. I think you will find they will either settle at the last minute or not file a defence. And even if they do file a defence, there is plenty on the website to rebutt any points they could possibly come up with. And the website operates a court buddy system. Keep reading... Regards

Thanks UK!

10/11/06 Got a defence filed by GMAC. The failed to give a basis for calculation simply repeating that it was a liquidated damages claus, not unfair etc so no refund. 12 points all in all. Have written a draft response to each point in their defence. Sorry I haven't include thier points here, but it is far too long to type out and I cannot add attachments. So just my response is here for your comments. It is rather long I am afraid. Any points gratefully recived. Needless to say it is a cobble from all the great advice on the site....thanks Zootscoot et al! In response to the defence filed by the Defendant, I wish to respond to each point made by the Defendant as follows: (1) The facts stated by the Defendant in item 1. are not in dispute. The Claimant agrees with the facts as stated by the Defendant. It is not disputed that the Claimant took out a mortgage with the Defendant on the terms stated. (2) The facts stated are not in dispute. The Defendant’s offer, containing standard and special offer Conditions were signed by myself, at that time, in the belief, as was generally accepted, that the Defendant’s conduct was lawful and complied with UK law - otherwise, I would not have signed the agreement. For reasons stated in the Particulars of Claim and further, below, this is no longer my belief. (2.1) Irrespective of the nature of practices and methods prevailing in the UK mortgage / banking industry today; I recently became aware through reports in the UK media, that there may be a basis for a legal challenge. And I wish to take this opportunity to take up to challenge application of ERCs in the Courts of justice. (2.2) The Claimant, as an individual was at the outset already at a substantial disadvantage as the Defendant is a large financial institution with ready access to legal advice, extensive marketing and financial expertise. At the outset, the Claimant thus relied on the integrity and expertise of the Defendant and their introducing broker. (2.3) The Claimant attests that the Defendant’s concealment of the true nature of the ERC charges has prevented the Claimant from asserting her rights until now. In addition to the existence of the ERC in the manner stated, the Defendant’s repeated representations that the ERC charge was fair and reasonable were and are deceptive and expressly deceived the Claimant into agreeing to pay them. (3) The facts stated are not in dispute. It is the lawfulness of the clause that is disputed here and now, not its existence in the mortgage contract. (3.1) The Claimant accepts the contention that redemption of the mortgage was expressly provided for in the mortgage offer. Condition 13 provides that an early redemption charge was payable in the event of redemption and thus represents a charge that is payable in anticipation of the event of a breach of contract. This term merely anticipates a breach and does not represent the exercising of a right under the contract. (3.1.1) The fact that the Defendant contemplated early redemption, in no way prevents my actions from amounting to a breach. To draw an analogy from criminal law, the fact that a policeman contemplates that a particular known offender may offend again in the future does not make the offender's actions lawful when he does in fact offend. (3.2) Nonetheless, in the event that the court were to find the said term as exercising a right and without prejudice to the above paragraph it is submitted that the fact that such a term exists does not prevent a court finding of breach of contract following the House of Lords decision in Bridge v. Campbell Discount Co Ltd [1962] AC 600 (4) The facts stated are not in dispute. For expediency, the Claimant accepts the Defendant’s amount of £12,389.44 rather than the amount stated in the Particulars of Claim. (5) The Claimant strongly refutes the Defendant’s assertions. The contractual term agreed for the loan was 25 years; the Claimant redeemed the loan fully before the expiration of the contractual term. (5.1) The particular term in the mortgage, which was breached, was an express term relating to the period of 25 years for which the mortgage was to run. This term of the contract was clearly stated in the written mortgage offer signed by the claimant. The terms of which were incorporated by reference into the mortgage deed, which was not only signed, but also witnessed. (5.2) There is clearly no room for doubt that such a clause existed in the contract. Similarly, there is no question that the claimant in fact redeemed the mortgage on 12/11/01. This date is clearly well before the contractually agreed 25year redemption date and thus represents a clear breach of the contract. The event of early repayment by the Claimant clearly constitutes a breach of the expressly agreed mortgage term, (5.3) The Defendant expressly specified via Condition 13 that in the event of a breach of contract specified by the Defendant as early repayment, an ERC charge would be made. (5.4) To further the contention that a breach of contract did in fact occur, it is submitted by the Claimant that the Claimant was clearly under a contractual obligation to pay monthly instalments to the Defendants for the agreed 25-year term and clearly has not made such payments since the redemption of the mortgage. (5.5) Condition 6.1 is a standard term of the mortgage expressly permitting the Claimant to repay early. (5.6) Condition 13 is a special Condition imposed by the Defendant that has the overriding effect in practice of varying or nullifying preceding Condition 6.1. The Claimant could only exercise her right to repay early on a payment of the ERC specified by the Defendant. (5.7) In the circumstances, the ERC is a payment due only on the occurrence of a specific event, expressly specified by the Defendant in Condition 13 as an early repayment event. (6) The Claimant asserts that the amount charged, as the ERC is disproportionate because it far exceeds any actual loss the Defendant could possibly have suffered. (6.1) Commercially, an applicant compensates the mortgage provider for the costs (from application to account creation), via a series of fees set and levied by the mortgage provider (via arrangement fee £345, valuation fees £320+£360), legal fees etc). The mortgage provider sets the level of compensation required to cover costs at the level of working capital. (6.1.1) Once the loan is active, the mortgage provider applies a rate of interest to the ongoing account calculated to further compensate the mortgage provider for the assessed ongoing risk and deliver an ongoing profit element to the mortgage provider. (6.1.2) The mortgage provider borrows funds at a low inter bank rate and lends to the applicant at a higher rate, a margin made up of future interest and profit to the provider. (6.1.3) On early repayment, the mortgage provider will no longer receive instalments over the duration, but receives the loan amount immediately and the loan having been repaid in full, quite rightly forgoes future interest and profit. Excluding the ERC, the applicant is also charged upfront for the administrative costs of early repayment (Mortgage Administration Fee £115). The Lender rarely gives the Borrower any credit by discounting the early lump sum repayment to present value to account for the fact that Lender is getting its money in one go, earlier than it would have done if the loan had continued for the full fixed rate period. (6.1.4) Commercially, even where market interest rates are falling, the question of a significant loss of future interest does not arise; In the real world, any risk is passed to Customers as banks / mortgage companies all delay lowering interest rates till spare funds are routinely and systematically re allocated to new applicants / markets at the prevailing (higher) rate using standard methods and without significant loss or high re allocation costs to the mortgage provider. (6.1.4a) In a rising market, the banks obviously benefit from reallocating funds at a higher lending rate. Consequently, it is very difficult to comprehend how GMAC RFC can claim a significant loss on this account. (6.1.5) On the issue of "losses" to the Lender, the remaining element is future profit. Compensation charged for the profit element is unlawful, as it inflates the actual "damage". (6.1.6) To my current understanding, the Defendant is in law entitled to recover reasonable actual losses suffered as a result of my breach via a reasonable pre estimate of actual costs. The Defendant is not entitled a disproportionate charge for actual costs nor to compensation on redemption for a perceived loss of future profit over the mortgage term. (6.1.7) To my current understanding, it is not equitable to levy interest on money that is no longer owed. Creditors are entitled to charge interest on the amount that it is owed for the time that it is owing, and no more. If account holders no longer owe the money, then mortgage providers are no longer entitled to charge interest on it. (6.1.8) Furthermore it is submitted that the Defendant must take into consideration the duty that an innocent party to a breach is under a legal duty to mitigate their loss in accordance with the principles set out in Payzu v Saunders [1919] 2 KB 581. In practice, Lenders should be looking to re-lend the money as advantageously as possible and rely on penalty clauses to hedge against commercial risk. (6.1.9) For reasons stated, I submit that the ERC charged is a disproportionate penalty for lost future profit not actual loss incurred (6.2) The claimant denies any contention by the Defendant that the term relating to the early repayment charge is a liquidated damages clause. Bridge v. Campbell Discount Co. Ltd. (1962) In this case a Customer bought a car under a hire purchase agreement. He paid the initial and first payments and then cancelled the agreement. The company tried to recover the sums specified in the contract for canceling the agreement, but the courts held that the sums payable were excessive and constituted a penalty clause. It was, therefore, unenforceable. According to Dunlop v New Garage there is a distinction between a penalty clause and liquidated damages clause. (Penalty deemed unlawful, liquidated damages as lawful). To amount to a lawful liquidated damages clause it must be shown that the fee levied amounts to a genuine pre-estimate of losses. A contractual term which provides for a specified amount payable (whether by a fixed sum or calculated by way of a percentage) must represent a genuine pre-estimate of loss if it is to be regarded as a liquidated damages clause Dunlop Pneumatic Tyre Co. Ltd. v New Garage & Motor Co. Ltd. [1915] A.C. 79. Under the Dunlop case a fee is a penalty if the sum stipulated is extravagant and unconscionable in amount in comparison with the greatest loss that could conceivably be proved to follow from the breach. In this case, the judges reached the conclusion that the sum to be paid for a breach of the contract was substantial and arbitrary and bore no relation to the potential loss of the other party. It was, therefore, a penalty. (6.3) The claimant has repeatedly asked the Defendant to provide the claimant with details of how their charge was calculated to represent a genuine estimate of their loss. In correspondence dated 21/09/06, 28/09/06 and 10/10/06, the Defendant has failed to respond to my requests to give a breakdown of its actual losses or provide a response as to how it came up with a genuine pre-estimate of its losses. (6.4) Thus the claimant is of the opinion that no genuine pre-estimate indeed took place. The claimant thus makes a respectful request to the court that disclosure of this information is provided to the claimant forthwith to bring an expeditious termination to the proceedings. (6.5) It is further submitted by the claimant that the Defendant’s failure to provide such information is for the reason that such information would reveal that the term is in fact a disproportionate penalty. Had the Defendant been able to demonstrate that the charge was indeed a liquidated damages clause it has had ample opportunity to do so and the claimant would not have need to initiate these proceedings. Again, it is thus respectfully submitted by the claimant that an order to disclose this information is made so as to satisfy the claimant that the charge is indeed a liquidated damages clause. The Claimant will not accept the Defendant’s assertions that the ERC represents a genuine pre estimate of the loss the Defendant suffered in the event of early redemption. (6.6) For reasons stated above, the ERC therefore amounts to an unenforceable penalty. (7) It is respectfully submitted by the claimant that a breach of S.4 of the Unfair Contract Terms Act 1977 is applicable because it provides that a business can only require a Consumer to indemnify their loss where it is reasonable (in accordance with s.11) to do so. Consequently, special Condition 13 should be regarded as unreasonable under s.11 of the said Act, as, the term effectively deprives the claimant of the right to exercise early repayment without payment of disproportionate penalty costs to the Defendant. (7.1) I believe a huge financial institution like GMAC RFC is better placed to bear the loss of its own commercial risk freely undertaken than myself, as a private, individual Consumer, relying of the expertise and integrity of the finance industry. (7.2) The practice of offering premium or discount rates are commonplace in the world of business and but few companies have the audacity to pass such commercial risk on to their Customers. It is a fact that Lenders offer and price fixed and discount deals in order to remain competitive. (7.3) The premium interest rate offered with my mortgage product represents a legitimate considered commercial decision by the GMAC RFC to attract my custom. A fixed rate protects the Borrower against rising interest rates. In order to lend at these rates, the Lender usually borrows on the market at a fixed rate. If the loan is repaid early and interest rates have fallen, the Lender will have to pay to break its own market deal. In theory, any liquidated damages cost is passed on to the Customer as an ERC. With fixed rates the Consumer also takes a risk in that interest rates could fall and bears all the risk. (7.4) In the real world, fixed rates are most attractive to Consumers in during periods of generally rising rates. The Lender is able to re allocate funds at the new higher prevailing rate at a higher profit – which of course is not shared with the redeemed Customer who provided them the opportunity. In addition, the Lender may already have collected an ERC from the redeemed Customer for the same funds re allocated at a higher lending rate / profit margin. This is the current status quo of a very happy ‘win-win’ situation for Lenders. (8) The Claimant submits that Para. 1(e) of Schedule 2 of the Unfair Terms in Consumer Contracts Regulations 1999 is applicable for the following reasons: (8.1) The court or Financial Ombudsman Service (FOS) will consider whether, with regard to the circumstances prevailing at the date of the contract, the term is one, which contrary to the requirement of good faith, caused a significant imbalance in the parties’ contractual rights and obligations to the Customer’s detriment. Paragraph 1(e) of Schedule 2 to the Regulations provides that a term “requiring any Consumer who fails to fulfil his/her obligation to pay a disproportionately high sum by way of compensation” may be unfair. As stated in 5) above, the express entitlement to redeem was varied by special Condition 13, which effectively placed this entitlement beyond the reach of the Claimant unless the Claimant paid the ERC specified. (8.2) The claimant contends that if the Defendant complies with the claimant’s request to provide a breakdown of losses to which the Defendant has been put to, it would reveal that the charge levied would in fact be revealed to be a disproportionate penalty under the Unfair Terms in Consumer Contracts Regulations 1999 (SI. 1999/2083). (8.3) The claimant’s account falls within the ambit of Regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 as the claimant is a Consumer. (8.4) The charge constitutes an unfair penalty under Schedule 2 of the said Regulations, which provide an indicative and non-exhaustive list of terms, which may be regarded as unfair. Under paragraph 1(e) of schedule 2 this specifically includes terms, which have the object of requiring any Consumer who fails his obligation to pay a disproportionately high sum in compensation. The claimant vigorously contends that this is the position regarding the fee of £12,389.44 charged to the claimant’s account. (9) The Claimant does not dispute the fact that terms and Conditions including the ERC clause were signed. The basis of the claim is that the ERC charged was not a genuine pre estimate of actual loss on breach and is a disproportionate penalty and therefore unlawful. (9.1) The ERC in Condition 13 applied to my account was clearly not designed to reflect the true cost to the Lender of liquidating my mortgage early, because it lacks entirely those attributes or badges, which would give a result that approximated to actual cost, except perhaps by pure chance. The disguised intention is to impose a disproportionate penalty as follows: · The ERC was not based on the absolute movement in market interest rates, rationally any downward movement from the fixed rate at which the Lender actually lent to the Borrower. · The ERC was not based on a relative movement from a starting rate (eg. Fixed rate at start of loan) to some current rate – typically either the current fixed rate at which the Lender says it will lend money to new Borrowers or the current fixed rate it says it can get by reinvesting the money on the money market. · To calculate the ERC, an interest rate differential was not applied. I.e. differential rate then multiplied by the amount being repaid early and the unexpired term of the original fixed rate period. · There was no discounting to give a ‘net present value’. This would take into account the fact that the Lender is in fact getting its money in one go, earlier than it would have done if the loan had continued for the full fixed rate period. This adjustment has been recommended by the Financial Ombudsman in several rulings even where not specifically stated in the contract, but continues to be ignored by most Lenders. · The ERC was charged on redemption and had to be paid before the Lender would consent to close my account. It was applied as a matter of course and upfront; implying that the Lender did not in fact and as a matter of course, look to re-lend the money to mitigate any actual loss on my breach. Any consideration of actual commercial risk is therefore excluded. This to my mind operates as an indemnity against any commercial loss without any action to mitigate. · Effectively a single fee is levied irrespective of the actual loss of interest, perhaps for perfectly understandable practical reasons, as interest rates cannot be predicted with any certainty in practice. For this reason, it is difficult to see how GMAC RFC can argue that the ERC fee was a pre-estimate of actual loss. (9.3) The finance industry has traded on their reputation for integrity to foist their unfair practices and penalty charges onto an acquiescent public. In recent years, Consumers have started to fight back on a number of well-publicised issues with many uncompetitive practices being challenged in Court, the most relevant here is the penalty nature of bank charges levied by all UK banks and credit card companies lead by ‘Which’ magazine and the Consumer Action Group. In April 2006, the OFT forced credit card companies to reduce their penalty charges - it set a "threshold for intervention" at £12, above which point it will presume the charge is unfair. Non-personal services, to small businesses for example are also subject to continuing controversy and allegations of profiteering from Customers. (9.4) It is disingenuous for the Defendant to present the mortgage industry as delivering transparent choice to Consumers. It is very much a part of the wider finance industry and employs a raft of unfair practices of its own - from the way it operates the credit register, to the rate of increase and nature of fees. For example, due to the nature of products offered, ERCs are hard to avoid – they are applied to fixed, capped, cash back, discounted and some base rate tracker mortgages – their application by Lenders have become remarkably standardised in recent years as Lenders manipulate fees to support margins. (9.4.1) Common practices such as the "bait and hook" which is an extended tie in, where for example a Borrower can get a lower fixed rate, say 5.5% for five years (the bait), but is then locked in (or "hooked") for another two or three years on a higher, variable rate or "bundling". This is where Borrowers are offered an interest rate lower than most others on the market. The snag is that Borrowers must buy overpriced buildings insurance from the Lender. The Lender gets a chunky commission from the insurer, which issues the policy. Customers typically end up paying as much as they would if the interest rate had been at the market rate. This marketing gimmick is particularly controversial because it prevents Customers shopping around for better insurance deals. Buying buildings insurance from a Lender typically costs much more than buying direct from an insurer. Another is annual interest calculation. This is where the interest on a loan is worked out every year rather than every day or every month. It means your payments don't reduce the nominal value of the loan, and therefore the amount of interest you pay, until the end of December each year. A Borrower with a £75,000 mortgage loses £75 a year because of this. Multiply this by a few thousand Customers and there is your motivation. (9.4.1a) The penalties are normally expressed in one of four ways by all the mortgage companies, some methods more reflective of true cost than others. In some cases early repayment charges are set at the start of the mortgage term and remain flat throughout the deal period, in others the penalty reduces each year. · As a number of months' interest · As a percentage of the advance (the amount you originally borrowed) · As a percentage of the sum repaid · As a percentage of the outstanding balance (9.5) Most residential mortgages are regulated by the FSA, which now requires a section in the Key Financial Information given to the Customer, and also in the mortgage offer itself, describing whether and when any ERC may be payable, with a least three cash examples showing the range of charges that may apply. The Claimant acknowledges the existence of Condition 13 but with hindsight now submits that the clause is defective in terms of clarity, by reference to industry guidance for ERCs in the following respects: · The term “early redemption charge” is clearly stated · No example calculations of the ERC were included, at least 3 are recommended precisely as the contract allows · The calculation for the ERC does not stand up to scrutiny as specified in (9.1) above. · The Defendant cannot demonstrate that the ERC charged fairly represents actual loss on my breaking the loan · The Defendant cannot demonstrate any mitigation of their position by looking to re-lend and/or discounting the ERC to reflect receiving the money in one lump sum (9.6) Choice or not, an early redemption penalty is an attempt to charge interest on money no longer owed. The Claimant does not dispute the Defendant’s right to make a charge to recover actual costs (or a reasonable pre estimate of costs). It is the basis / nature of the ERC actually charged in substitution for actual costs incurred by the Defendant, due to the Claimant’s breach of contract, that is challenged here. 9.7) There is a very clear rule of law that says that the Lenders are only allowed to make certain charges. Consumers are not exploiting a legal loophole just demanding their rights by petitioning the Courts to bring Lenders back to lawfulness. (9.8) The mortgage industry has substituted 'not making as much profit' for 'making a loss'. To my mind, the two things are completely different. Common law permits recovery of 'liquidated losses' only. The only way they can justify the ERC is if that sum is the actual cost to them of ending my particular mortgage early. In other words, they would have to be able to point to specific expenditure, which they had to make in order to end my mortgage, and that is what the penalty is there to recover. I am petitioning the court because I believe the law says a mortgage Lender cannot charge more than the actual costs or losses incurred. And Borrowers are entitled to have their charges calculated accurately and the basis of the charge explained fully. The Defendant has in my opinion failed to act lawfully in these respects. (9.9) I would respectfully draw the court’s attention to the following statement from the OFT website ‘ A term in a mortgage agreement which requires the Borrower to pay more for breaching the contract terms than actual costs and losses caused to the Lender by the breach (or a genuine pre-estimate of that) is likely to be regarded as an unfair penalty and to be unenforceable both at common law and (in a Consumer mortgage) under the Unfair Terms in Consumer Contracts Regulations. A redemption charge may be regarded as a penalty even if it is expressed as the price for exercising a right rather than a consequence of breaking the agreement’’ (10). It is submitted that the early repayment charge applied by the Defendant was unfair, unreasonable and disproportionate. For this reason, the Claimant contends that it is unenforceable entirely. (10.1) The Claimant contends that such a charge represents a disproportionate penalty and a fee calculated by terms of a percentage of the sum repaid can not amount to a genuine pre-estimate of the Defendant’s loss, but moreover represents a fee levied with a view calculated to profit from the claimant’s breach, to act as a clog on the equitable right to redeem and or to punish the claimant for its breach of contract. 11) The Claimant claims a refund of the ERC charge of £12,389.44 plus statutory interest on the grounds stated above and below plus court costs. 12) A claim for interest on the ERC charged from 12/10/01 to date is submitted.

Thanks all! Am just about to move again so is very timely indeed. Itching to make a donation to this site though. But will wait til the moving dust has settled.

Thanks Zoot, but I figured the judge would just ask us to try to sort it out between ourselves one more time, before he has to sit, they have been so incompetent....Judges seem to appreciate it when Claimants try to settle beforehand don't they. Besides, by the sheer uselessness of the first submission, I don't they will come up with anything challenging.... Am just preparing a response to the GMAC defence I have just received. If you have a few minutes, would you please give it a once over? Will PM you when it is posted. Thanks!

Received a cheque today for my solicitor for the ERC amount! Though he has been holding it since august , he has kept the interest. So, this is a closed case. Mortgage Express failed to claim the ERC due on redemption, don't know why and don't really care. Hooray for now.....assuming they don't wake up and try to claim it back.

Thank you very much. Couldn't have done it without the site and support!

9/11/06 Got the following message from solicitor today. Will confirm when the eagle has landed.!! 'I have sent to your account £13,327.87 despite the fact that I have still not heard from Mortgage Express. This is on the basis that you agree to reimburse me this sum in the event of Mortgage Express, for any reason, reclaiming this figure from me. I will let you have a detailed financial statement next week.'

I asked for a refund of ERC on two mortgage accounts with I group. They have responded on one account and are ignoring the other larger one. I have sent LBAs for both accounts.

9/11/06 A letter out of the blue... 'Early repayment charges are standard in the mortgage industry and the sales person who sold you your mortgage would have made you aware of their existence. The level of early repayment charges are clearly stated in both your T&Cs and in your mortgage information booklet - both of whic you received prior to your mortgage commencing. I have enclosed copies of these for you. The fact you would be required to pay and ERC on early settlement was also discussed in your welcomoe call, you confirmed your understanding of our early repayment charges during this call. ERC are designed to help us recover the costs of customers settling early. These costs include: 1) The cost of specialist reseources we use to set up our loans and assess our risks 2) Our administrative expenses in maintaing your account 3) The commisions paid to intermediaries on loans which complete because (a) the specialised loans we make involve intermediareis carrying out more work than normal (for example to satisfy ouro need to make sure you can meet your payment obligations), and (b) a high percentage of loan applications do not result in a loan being made, so the broker will receive no comomision on these, even if he has done almost all of the work 4) An element of our loss of profits caused by you repaying the loan early. In light of these costs, we will not be looking to refund the ERC.' ------------------------------- Interesting design I would say - a very useful breakdown of the components of their costs, which i haven't seen anywhere before. I see though he has excluded the profit element. It all sounds very plausible until you realise it may well be against the law because they are only allowed to recover a reasonable pre estimate of genuine loss, which does not include profit for anyone. With regards to disclosing actual costs: 1) the cost of specialist resources we use to set up....I presume this refers to underwriters specifically because all legal and valuation expenses are paid by the applicant. There is a further admin fee paid by the applicant to cover the process of application, assessment etc. At least that is how they explain the charges. So what other specialist input / cost might this refer to? 2) Our administrative expenses in maintaing your account.....Once the account is all set up, this must be purely IT driven as long as there are no manual interventions. For an automated process, the cost must be peanuts. 3) Our funding costs....Em, they borrow at low interbank rate and lend to me at a higher rate. Where is a cost to them in that? I think they mean I have cost them profit. Yes, they have to endure costs to be in business and that should be covered by their pricing of the products. I am not arguing with the pricing but the penalty element. 4) The commissions....am thoroughly confused by this one. If further surveys etc are required. The applicant pays up front. The broker may or may not get a fee depending on the type of mortgage. I paid direct to my broker and so compensated him directly. Commission paid by the mortgage company is surely like any other cost to bring the product to market, especially if they will only offer the product to the market via a broker. 5) An element of our loss of profits caused by you repaying the loan early. As far as I understand the law, this is illegal. They cannot make me compensate for lost future profits, which they would have got if I had not terminated the loan when i did. All in all I think the pricing of their products would cover their working costs to offer, process, issue and maintain my mortgage. If not, that is not my problem. If they issue a loss making product to induce people to sign up, they cannot then get you to compensate them for lost profits, only actual losses. And they cannot charge twice for each element of cost. Nor can they say I must compensate them for all their costs after he fact, when they issued a loss making product to the market. Nor charge me for future profit lost. Any comments much appreciated. Will sit tight and wait for their acknowledgement of service.

Just for completeness, this is my response to their defence on 6/11/06, with a request to a month's grace to allow them to sort themselves out. SECTION G - OTHER INFORMATION In response to the Defendant’s submission of defence, I would like to draw the Court’s attention to the following facts: With regards to item (1) in the written defence submission The Defendant has mis identified me. I did not, do not have and have never had a current account with the Defendant. My only account with the Defendant was a mortgage account, with original reference 17363604 and not roll number D/33289135-7 as given by the Defendant. I have no idea where the Defendant got the reference given and can only assume a clerical error has occurred. Though the last letter from the Defendant dated 10/10/06 from Kenneth Graham, gives a reference of 111650610, which was previously unknown to me. Consequently, the defence submitted by the Defendant is irrelevant to me personally and therefore to this action. Please note that prior to the Defendant’s submission, my identity, correct details of my account, amount of claim, date claim arose and basis of claim were given to the Defendant by myself, in writing on 21/09/06 (attached) in a preliminary letter and 29/09/06 (attached) in a letter before action. Bank of Scotland acknowledged my identity, claim amount, my basis of claim etc in writing in their responses dated 28/09/06 (attached), 3/10/06 (attached) and 11/10/06 (attached). Further the particulars of my claim were made know to the client in the documents submitted to court to start this claim. I am therefore at a loss to understand how, at this stage the Defendant can claim the particulars fail to specify how much I am actually claiming. Unless of course he has not referred to court papers or prior correspondence on the matter. With regards to item (2) and (3) in the written defence submission For reasons given above, the facts submitted do not apply to this case. With regards to item (4) in the written defence submission This is another complete surprise. This is the first time I have heard of any offer of a refund or any other kind of settlement from the Defendant. As the court will note from previous correspondence with Defendant, the Defendant has previously declined on two separate occasions to offer me any kind of refund on the basis that ‘it is not practical from a business point of view for the Bank to absorb a discount that was given to you that was then recouped on the early repayment of the mortgage account’ (letter dated 25/09/06 from Melita Mason). ‘It is important to appreciate that the repayment charge plays an important part in pricing of our products, so that when a product is offered with an agreed rate of interest, it is on the understanding that the product will be retained for the whole period. Any decision to repay a mortgage prior to the expiry of the agree period requires recovery of our costs through the repayment charge.’ (letter dated 10/10/06 from Kenneth Graham) With regards to item (5)& (6) in the written defence submission For reasons given above, the facts submitted do not apply to this case. In conclusion, I have repeatedly asked the defendant to justify their charges by providing a full breakdown of the specific costs suffered as a result of my breach, in order to fully disclose that their charges really do reflect their costs, but they have failed repeatedly to do so. In addition, I strongly refute the contention by the defendant that the term relating to the early repayment charge is a liquidated damages clause. A contractual term which provides for a specified amount payable (whether by a fixed sum or calculated by way of a percentage) must represent a genuine pre-estimate of loss if it is to be regarded as a liquidated damages clause Dunlop Pneumatic Tyre Co. Ltd. v New Garage & Motor Co. Ltd. [1915] A.C. 79. The claimant has repeatedly asked the defendant to provide the claimant with details of how their charge was calculated to represent a genuine estimate of their loss. The defendant has failed to respond to this request and thus the claimant is of the opinion that no genuine pre-estimate indeed took place. The claimant thus makes a respectful request to the court that disclosure of this information is provided to the claimant forthwith to bring an expeditious termination to the proceedings. The claimant contends that if the defendant complies with the claimant’s request to provide a breakdown of losses to which the defendant has been put to, it would reveal that the charge levied would in fact be revealed to be a disproportionate penalty under the Unfair Terms in Consumer Contracts Regulations 1999 (SI. 1999/2083). The claimant’s account falls within the ambit of Regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1999 as the claimant is a consumer. The charge constitutes an unfair penalty under Schedule 2 of the said Regulations, which provide an indicative and non-exhaustive list of terms, which may be regarded as unfair. Under paragraph 1(e) of schedule 2 this specifically includes terms, which have the object of requiring any consumer who fails his obligation to pay a disproportionately high sum in compensation. The claimant vigorously contends that this is the position regarding the charge of £3699.99, which the defendant deemed fit to apply to the claimant’s account. It is further submitted by the claimant that the defendant’s failure to provide such information is because such information would reveal that the term is in fact a disproportionate penalty. Had the defendant been able to demonstrate that the charge was indeed a liquidated damages clause it has had ample opportunity to do so and the claimant would not have need to initiate these proceedings. It is thus respectfully submitted by the claimant that the defendant’s defence be struck out as an abuse of process or in the alternative that an order to disclose this information is made so as to clearly disclose to the claimant that the charge is indeed a liquidated damages clause.

8/11/06 Got a letter out of the blue today from the senior, senior customer relations person. I quote ' Thank you for your letter dated 9th oct 2006. Whilst I note all that you say in your letters, regrettably, there is little I can add to my colleague xx letter of xy and the previous letter you received from Xx. I firmly believe we have made every effort to resolve your concerns but must advise that we are unable to uphold your compolaint. The details given in xx's letter represnt the full and final response from the bank. As previously advised, you may refer your concerns to the financial ombudsman.'' Have already responded to their duff defence, so I guess this was a last ditch attempt to put me off. Am waiting ....

6/11/06 Got their defence today. Cannot quite believe it, but they referred to a completely different account number and customer in their defence statement and made me a he! Have sent it back and given them a month's grace to sort themselves out...and to show willing in to the court. Unbelieveablely incompetent. Some solicitor in Winchester. Will let you know what happens.