Halifax rejects new mortgage claims

THE HALIFAX today put itself on a collision course with the mortgage watchdog after it refused to compensate thousands of borrowers who were charged too much for their mortgages. Tens of millions of pounds are at stake but the Halifax is refusing to budge.

The Financial Services Ombudsman ruled last month that several lenders had acted inappropriately when they set up two mortgage rates and forced some borrowers to price their loans against the higher rate.

Nationwide building society immediately chose to compensate 400,000 borrowers at a cost of £90m. The Halifax will compensate only 10,000 customers who complained about its mortgage rates before the Ombudsman's ruling on 31 January. They are each receiving £350 plus £150 for inconvenience caused.

Some 20,000 customers who wrote in after that date are being sent away with an ex gratia payment of £100. Anyone complaining after today will receive nothing. In all, the Halifax is paying out only £7m.

The Consumers' Association said: 'This is a pitiful response from the Halifax. We are really concerned for consumers who joined the Halifax thinking they would get a fair deal.' A spokesman for the Halifax said: 'The Ombudsman has confirmed that any customers who contacted the Halifax for the first time since 1 February are not eligible for a refund.'

The Ombudsman flatly contradicted this statement. 'We have not said that at all. Any customers who are unhappy should write in the first instance to the Halifax and if they are not satisfied with the response, they should write to us,' said a spokesman.

Discussions are taking place between the bank and the watchdog in an attempt to ensure borrowers are given fair treatment. Other lenders, including Abbey National and Cheltenham & Gloucester, also face compensation demands.