Thousands of customers between 1987 and 1993 were not told by the lender that it had extended the life of the mortgage to maintain monthly repayments in a rising interest rate environment.
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The Financial Ombudsman Service (FOS) revealed it had received a number of complaints from consumers regarding the issue, although it admitted most of these had come around the turn of the century.
Emma Parker, press officer at the FOS, said: “Historically, it was the Banking Ombudsman who received many of the complaints so hopefully most consumers should be aware, either through remortgaging or the fact most statements now have an end date on them. However, if consumers still feel they have cause for complaint then they can approach us.”
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A spokesperson for Abbey said that it was an issue it felt had been dealt with. “The problem of underfunding received a lot of press in 2001 but now affects a very small number of people. The Ombudsman ruled on this issue in 2001 and we, like other banks, follow this guidance when assessing a customer’s case.”
Parker also insisted that while the FOS could deal with individual complaints, any wider action against Abbey would be a matter for the Financial Services Authority (FSA).
However, Robin Gordon-Walker, spokesperson for the FSA, said it didn’t have the remit to look into complaints regarding underfunding as it would have occurred before mortgage regulation was implemented.
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He explained: “Since the introduction of statutory mortgage regulation, lenders have been required to give all information on the mortgage, including length, and if they don’t do what we expect, we’ll deal with them accordingly. However, from our point of view, all this happened before October 2004 so our regulation wouldn’t cover it.”
