Northern Rock must refund 'Together' mortgage customers

[Michael Browne]

More than 40,000 British borrowers are in line to get thousands of pounds in compensation after the High Court ruled against former bank Northern Rock in a test case over the wording in past loan documents.

 

The court judgment said about £258m could be paid out in compensation by taxpayers, as the government now owns the part of the bank that made the loans. The amount is more than Northern Rock’s highest estimates.

 

The payments will go to 41,000 former Northern Rock customers - at an average of £6,300 each - and are likely to prompt other banks and the regulator to double-check whether any past loans were incorrectly worded.

 

The High Court ruling released on Wednesday was against Northern Rock Asset Management (NRAM), the "bad bank" of Northern Rock that was nationalised in 2008.

 

NRAM effectively brought the legal claim against itself to test whether documents issued to customers under previous "Together" mortgages were incorrect and if it owed compensation.

 

NRAM is considering whether to appeal the ruling. Subject to that appeal, it is expected to offer compensation to the affected customers without them needing to apply through the courts.

 

 

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/11285163/Former-Northern-Rock-customers-set-for-258m-payback-after-court-ruling.html

 

 

Full ruling here:

 

http://www.judiciary.gov.uk/judgments/nram-plc-v-mcadam-hartley/

[spamheed]

this is Loan agreements above £25k but printed on CCA regulated documentation?

 

 

Own Goal by NRAM oops!!

[andrew1]

So what happens when a first charge mtg/loan with a different bank, exempt under s.16 from CCA regulation back in 1989 comes with documents which state Interest was being asked in the first year to the end of the financial year "and we are advising you In order to comply with the Consumer Credit Act" ?

 

and what about a further advance which says the same thing under 25k (or 15k as it was back in '89)?

 

Sounds very interesting this....not read the full judgement yet,but will tomorrow....

 

A1

[davyatsea]

Very interesting - I need to read the full judgement to gain the fuller picture. However with an unsecured element of approx 27k outstanding, any refund will undoubtedly help me with long term future stability - also not forgetting the massive hike in APR since I delinked when my old house was sold. As I say, I do need to read the full judgement first.

[Never trust banks again]

I have a mortgage that was taken over by NRAM when Northern Rock collapsed. It has been classed as a toxic debt by our bank when I tried to get a new mortgage yet we have never been in arrears or even ever missed a payment,

 

 

Since NRAM came into existence it has been a license to print money for its shareholders - my mortgage interest rate is still over 4½% and has been throughout the recession(s) costing me thousands in interest that should have been writing down the outstanding capital.

 

 

The documentation they sent out originally stated that NRAM was there to help people stuck in this trap of negative equity where the loan value was higher than the property value at the time of taking out one of these joint "mortgage and top up loan" mortgages, yet all they have done is damage my credit rating and take, take, take.

 

 

Are all mortgages that are made up of these elements classed as "together" mortgages? It would be nice to finally get some good news and a pay out from one of these shark operators. I don't suppose the loan element would be unenforceable if they used the wrong contract terminology?

[drakhan]

I took out a Northern Rock Together mortgage in 1999. I lost my job unexpectedly in 2000.

They took the house and sold it for the secured part of the mortgage but left me with about £16,000 to pay from the unsecured part.

I didn't realise i had PPI as part of this as it was never discussed with me.

With this ruling were do i stand on this regarding any compensation.

When it was confirmed i had PPI i was also told because i lost the house i don't get anything.

[davyatsea]

Hi there, Has there been any updates on this. It all seems to have gone quiet. I am looking at whether I need to complain to NRAM about a few issues, but just wondered what was happening with them before making any moves.

[citizenB]

I think it needs to be established if they intend to appeal or not. I would have thought the time for doing so would have passed by now.. but if we can find something for sure that would be good.

[Hillsey]

What has happened with this, did they appeal?

[citizenB]

http://www.moneysavingexpert.com/news/loans/2015/05/nram-borrowers-with-loans-of-25k-may-get-compensation-if-appeal-goes-their-way

 

Well it looks like Northern Rock did appeal and the Judgment was supposed to have been handed down in July of this year.

 

In addition, the Court ordered NRAM to pay for a transcript of the hearing to be published on its website, which it has yet to do. It says it is still awaiting tapes from the court. Transcripts of court hearings aren't produced automatically, but the court made this request as it's in the public's interest.

 

 

So it might be worth keeping an eye on NRAM's website.

[citizenB]

Hmm, well it appears the Court of Appeal overturned the original judgment....

 

Thousands of former Northern Rock customers have lost an unexpected compensation windfall after an appeal court ruling.

 

Northern Rock Asset Management has won a court appeal which overturns a ruling that would have triggered compensation pay-outs totalling more than £250m.

 

Last December more than 40,000 customers were celebrating news they could receive thousands of pounds in compensation following a High Court ruling over documents sent out by former Newcastle bank Northern Rock.

 

 

 

 

“The Court of Appeal ruled in favour of NRAM, confirming that customers who took out unsecured loans of more than £25,000 under agreements that incorrectly stated these loans were regulated under the CCA, are not entitled to the same rights and remedies as those customers who took out loans that were regulated under the CCA.”

 

 

 

http://www.chroniclelive.co.uk/business/business-news/former-northern-rock-customers-lose-9717094

[citizenB]

From NRAM's Website.

 

http://www.n-ram.co.uk/loans/loans-over-25000

 

Historically, some NRAM customers took out unsecured loans for over £25k on documents which incorrectly stated these loans were regulated under the CCA. It was legally unclear whether those customers were entitled to the same rights and remedies as customers who took out loans that were regulated under the CCA. As NRAM is fully committed to acting in accordance with the law and treating both customers and the tax payer fairly, NRAM asked the High Court for a declaration of the meaning of those agreements. The High Court considered the documentation and decided that it meant customers were entitled to the rights and remedies applicable to a regulated agreement (in so far as this was possible).

 

After considering legal advice NRAM decided to pursue an appeal to obtain fully legal clarity and secure a fair outcome for both customers and taxpayers. The Court of Appeal has now provided its judgment and ruled in favour of NRAM.

 

 

[citizenB]

http://ewriter.eu/articles/NRAMOutcome.pdf

 

 

 

 

NRAM appealed from this ruling to the Court of Appeal. The appeal was expedited and heard over two days on 28/29 April 2015 by Longmore, Richards and Gloster LJ. In its reserved judgment handed down on 23 July 2015 the Court of Appeal has unanimously overturned the ruling of Burton J on all issues bar one.

 

 

The Court of Appeal has ruled that where NRAM used documentation compliant with CCA 1974 for loans outside the scope of CCA 1974, the lending is not regulated by CCA 1974. However, the Court of Appeal ruled against NRAM finding that it had made a representation that its loan agreement is CCA 1974 regulated.

 

While such a representation could give rise to a claim in damages under the Misrepresentation Act 1967 (MA 1967) any such misrepresentation claim against NRAM was made over six years ago and is now time-barred under the Limitation Act 1980 (LA 1980).

 

No application was made by the defendants in the Court of Appeal for a final appeal to the Supreme Court.

 

 

So all bar one of the issues were found in favour of NRAM and the one that could have at least given customers the right to bring a claim under misrepresentation was now time barred !