Halifax compensation 'not enough'

THE Halifax has begun a partial U-turn over a mortgage rate row and will pay an initial compensation bill of £7m.

The Financial Ombudsman Service ruled at the end of January that the Halifax's two-tier base rate system was unfair and customers who were denied the cheaper rate should be compensated. Now the bank is to give 10,000 people an average refund of £350, plus a compensation cheque of £150 for inconvenience. A further 20,000 mortgage-holders will get £100 each.

But Britain's biggest home loan bank insisted hundreds of thousands of its customers would get nothing. It was accused on Monday of acting the bully when it tried to introduce an artificial cut-off point for complaints. It claimed that those who complained after February 1 would not be entitled to any redress. That would mean Daily Mail readers who followed our advice after the ruling to write and demand compensation would remain out of pocket.

The Ombudsman immediately rejected the Halifax's claim and said customers could still pursue full compensation. He also said the 20,000 customers who are offered £100 by the Halifax need not accept that sum and could still pursue full compensation.

On Monday the Consumers' Association said the Halifax was 'using every trick in the book' to wriggle out of giving compensation. It urged homebuyers to continue to fight for full compensation.

It said the Halifax should follow the example of the Nationwide building society, which last week agreed to pay £90m to 400,000 customers who were victims of a similar trap. The dispute centres on the introduction of a new lower mortgage base rate in February last year, which was a reduction of 0.75% on the normal Halifax rate.

It subsequently emerged that more than one million of the bank's existing customers on capped or discount mortgage deals would not benefit from the new rate but would have to continue to pay the higher base rate. Some complained to the Financial Ombudsman Service, which in January ruled in principle that they should have been linked to the lower rate. But its decision related only to individual complaints and did not set a precedent for all customers.

The Halifax has tried to use this technicality to avoid offering blanket compensation. It said individuals would have to take complaints to the Ombudsman before they would be considered.

Mick McAteer, money expert at the Consumers' Association, said: 'The Halifax is up to its usual tricks. They are trying to get away with paying as little as possible. I fervently hope that customers see through this inadequate arrangement. The attitude of the Halifax is in stark contrast to the way the Nationwide has behaved. It shows the difference between a bank which is loyal to its shareholders and a building society which puts customers first.'

An Ombudsman spokesman said: 'There is no date or cut-off to stop people making a complaint. The Halifax cannot take away customers' right to complain.' Halifax spokesman Mark Hemingway said: 'We are applying fully the ruling as it appeared to Halifax. We hope it now draws a line under the dual mortgage rate situation.'

Dual rates: how to claim