I requested Amigo about some main points of the redress other folks gets in the event that they make a declare to the proposed Scheme and Amigo upholds the declare.
Amigo has had an entire exchange in its Board of Directors. It now likes to signify that it is going to be dealing with court cases significantly better. But the solutions to my questions are tense.
The “unpaid interest” deduction
Amigo applies this when it has made up our minds a top-up mortgage used to be unaffordable however no longer the former mortgage. It works out the refund at the unaffordable mortgage, however then it takes away “unpaid interest” from the primary mortgage. No different lender does this.
These deductions can vary from a few hundred kilos to hundreds. One reader had greater than £5,000 taken away.
The good judgment at the back of this deduction seems to be that they’re seeking to put the client again within the place they might were with out the top-up mortgage. And to do that they’ve assumed that if the second one mortgage used to be no longer given, the primary mortgage would have persisted to the end, so Amigo would were paid the interest on it.
But that makes little sense. There is not any means of figuring out if the primary mortgage would have persisted.
Even if the primary mortgage used to be “affordable” on the time it used to be taken out, it would possibly not were by the point the borrower made up our minds they crucial the top-up mortgage. Usually other folks need to borrow extra as a result of they’re too in need of cash, incessantly as a result of making the repayments to the primary mortgage. So if the top-up mortgage have been refused, the borrower would have needed to search for different choices. For instance, the guarantor may have taken out an inexpensive mortgage to settle the Amigo mortgage.
The borrower wasn’t given any selection via Amigo – they needed to settle the primary mortgage. This used to be paid off with cash the borrower by no means had. So for Amigo to show spherical and say the borrower isn’t allowed to settle that mortgage turns out extremely unfair.
What would the Financial Ombudsman do?
The Financial Ombudsman (FOS) has made choices on hundreds of those top-up/refinancing scenarios throughout many lenders. It hasn’t ever steered that the agreement of the primary mortgage should be unpicked leaving the borrower owing extra interest.
Here is a FOS decision about a large bad credit loan, the place any other lender attempted to argue for a similar-sounding deduction. The conclusion used to be:
I don’t assume the deduction Likely Loans needs to make from the reimbursement because of Mrs W is truthful and cheap in all of the instances of this situation.
Numerous those Amigo circumstances have long gone to FOS. But in all of the ones I’ve noticed made up our minds, FOS has appeared on the case and made up our minds that the primary mortgage used to be additionally unaffordable, so the unpaid interest deduction used to be now not related. Of path that still says so much about Amigo’s deficient criticism dealing with, that it’s been rejecting refunds on reasonably priced loans.
Will Amigo proceed with this deduction within the Scheme?
This deduction gave the look of a crafty plan to avoid wasting Amigo cash via paying decrease refunds.
On the hot Amigo choices I’ve noticed, it’s nonetheless being implemented. But I was hoping the “new Amigo” would possibly need to exchange its thoughts and practice the traditional FOS redress procedure within the proposed Scheme.
I requested Amigo whether or not unpaid interest deductions can be implemented within the Scheme. It would were quite simple for Amigo to mention No, they wouldn’t.
But I used to be given this answer:
Where a buyer has a excellent mortgage adopted via a foul mortgage, we will be able to be taking the client again to the location they might were ahead of they took the unhealthy mortgage.
That seems like a convoluted means of claiming they’re proceeding with this deduction.
CCJs aren’t going to be deleted
Another query I requested Amigo used to be whether or not they can be clearing defaults and neglected bills from other folks’s credit score data for unaffordable loans and taking away CCJs on an unaffordable mortgage.
Amigo mentioned they might be clearing credit score data – excellent!
But that they wouldn’t be taking away CCJs. I do not know why no longer. If a mortgage is unaffordable the client should by no means were taken to courtroom for a CCJ.
A CCJ in your credit score document is a serious problem and FOS at all times says the lender should organize for them to be got rid of. This comes to making use of to courtroom for a put aside, the prison time period for deleting the CCJ.
So no signal of higher criticism dealing with
This feels relatively miserable. Not the brand new broom coming in with much-needed adjustments.
Meet the brand new boss… identical because the outdated boss…