Savers prepare legal action against West Brom over hike in tracker mortgage rates

A GROUP of landlords is taking legal action against West Bromwich Building Society following its decision to increase its tracker mortgage rates.

The landlords, represented by the Property118 action group are claiming the 1.9% increase, announced in December, was unlawful because there had been no rise in the Bank of England’s base rate.

Reports in The Sunday Telegraph said the increase affected 6,700 savers with monthly repayments more than doubled for many of them.

Property118 has grouped together a collection of savers and raised funds to support legal action against the society. Legal papers are set to be served on March 31.

On its website, Property118 said borrowers representing 84 mortgage accounts affected by the rate hike had attended a secret meeting to plan their campaign.

At the meeting, which took place last month, it was confirmed that 420 affected mortgages are currently represented by the campaign group.

Property118 had previously created a secure forum for paid up members of the group to discuss various legal strategies, one of which was a proposal to West Brom to consider arbitration as an alternative to court action. Each member had paid £240 for each affected mortgage plus a contribution to a campaign marketing campaign.

“Arbitration was proposed for tactical legal reasons which were explained by the group’s advisers, some details of which must remain confidential for legal reasons,” said the website.

“This would have been significantly quicker and cheaper for all concerned and had massive upsides to West Brom in that the outcome would be confidential. In other words, if West Brom had lost the case, nobody would have ‘officially’ known about it other than those who had already paid to be a member of the campaign group. This would have meant the worst case scenario for West Brom would be losing no more than 10% of their reported £19m of additional annual profits from this rate hike.

“West Brom refused!

“This refusal now plays very nicely into our hands for litigation purposes as it will be frowned upon by the courts, especially if we lose our case and end up having to pay costs associated with the David and Goliath battle.”

Those attending the meeting voted unanimously to proceed immediately with litigation, represented by barrister Mark Smith.

The group has urged any more affected savers wishing to join the campaign to pledge their intentions by March 28.

“We already have more than double the necessary funds on account to pay our own legal team. Mark Smith has agreed to represent borrowers for a fixed fee of £120 + VAT per affected mortgage subject to there being at least 250 borrowers committed,” added the statement on the Property118 website.

Mr Smith told The Sunday Telegraph the West Brom had rejected the chance to arbitrate.

The newspaper said a spokesman for the building society had claimed the financial ombudsman already served this role, adding the ombudsman had received a large number of complaints from West Brom customers but had not yet issued any final decisions.