BARCLAY'S BANK has ripped us off with a Bank charge of £3,300 and refuse to give it back...

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I was wondering if you could assist on a matter of a bank levying a bank charge on us on an astronomically level, to the tune of £3,300. Maybe this would also be an interesting story as an example of bank charges gone mad? To explain, Barclays have rejected my complaint, but I think the facts speak for themselves and remain in shock that Barclays still think they have a case to defend.

This is a case of us being charged £3,300 as a mortgage exit penalty, when we had already paid an upfront charge of £1000 for a fixed rate. This has been forced on us by Barclays and we can’t afford to lose that sort of money and remain in shock that a bank can levy a total charge of £4,300 on a customer!?

We relied on our bank Barclays to assist us with our most important financial milestone of purchasing our final family home and how wrong were we:

The facts

• We already held our mortgage with Barclays and were around 1 year in of our 2 year fixed term. We turned to Barclays for lending to purchase our final family home and from the start this all went terribly wrong! Over a number of months Barclays provided several incorrect lending figures. We didn’t have a clue what to believe as their on line calculator, gave a lending figure of £183,000 but we had figures ranging from £145,000 up to £171,242.

• We could not trust anything that Barclays was telling us as they had failed us on every level and we had no choice but to turn to another high street lender for assistance. Upon contacting Halifax they immediately gave us a lending figure of £183,000, which was exactly the figure we needed and had based all our financial decisions on.

• Barclays said that their lending figure was £171,242, but Barclay’s calculator still gave £183,000, which was also the exact figure that Halifax would lend us, so for me, I maintain that Barclays had arrived at an incorrect lending figure and with the catalogue of errors made by Barclays their failings and incompetence forced us to have no choice but to move our mortgage to Halifax who were more than happy to help, as we were about to lose the purchase of our final family home and Barclays therefore forced the charge on us.

• To reiterate Barclays on line mortgage calculator gave a figure of £183,000, Halifax would also lend us £183,000, so how did Barclays manage to give us several incorrect lending figures with differences of 10’s of thousands pounds? Something was clearly wrong and I question everything Barclays confirmed to us!

• Barclays accepted liability for all these failings and paid us £300 by way of an apology, but for me surely by accepting liability for all these errors they should also accept liability for the charge they forced on us and pay this back to us.

• To comment further, we were happy to stay with Barclays and port our current mortgage with the additional lending to purchase our final family home. I maintain that as Barclays lending figure was short by 12k of their own mortgage calculator and Halifax’s lending figure that something clearly wrong and they forced us to have no choice but to move our mortgage to Halifax and therefore forced the early redemption charge of £3,300 on us. I remain of the view that Barclay’s catalogue of errors forced us to have to leave Barclays and therefore why should we be subject to a charge that they forced on us!

• Furthermore, when we initially moved from HSBC to Barclays this was done by telephone and we were ‘advised’ as part of that application process that whilst there would be ‘charges’ on our initial mortgage as an existing mortgage customer we would not incur any subsequent charges, if we remained with Barclays and fixed to any new deals.

• I also make the challenge that when we fixed again with Barclays, whilst I accept that we were advised of the upfront charge, which I questioned at the time given we were told that no further charges would be incurred, I’ve argued that the early repayment charge of the flat fee of 3% was therefore not fairly or reasonably explained to us as based on previous Barclay’s advice no such charge should have existed. I therefore challenge that Barclays gave us incorrect financial advice!

To support my cases further, I checked the Financial Ombudsman Service’s own technical guidance on the matter of such a charge and I made the following challenges:

‘How fair is the early repayment charge:’

• The lenders actual loss if a mortgage is repaid early is also a consideration. So an early repayment charge may be unfair if it’s more than the actual loss to the lender, given the discounted rate for the set term and at what point it is being exited.

• If an early repayment charge is unfair, the consumer is not bound by it, even if they knew about it. The rules also state that you cannot retrospectively apply a reasonable charge.’

• I therefore commented that surely Barclays as per FOS’s guidance can’t be allowed to get away with overcharging on such an extortionate level when considering Barclays actual cost for us exiting the fixed mortgage 1 year early and the fact that we had already paid an upfront c£1000 fixed fee charge. So with an early redemption fee of c£3,300 and £1000 upfront charge this also being a ‘double charge’, giving a massive total c£4,300 charge.

• I presented rough calculations as I don’t have the exact figures to demonstrate how I see their actual cost / loss and how its clearly not fair and reasonable.

When you compare Barclays variable follow on mortgage rate, if we had not fixed the rate would have followed on at 3.39% compared to our fixed rate of c2.89%, so the loss in interest difference is only c0.5%; so how can they justify such a charge?

Rough calculation and on a ‘simple’ interest basis:

Mortgage of £131,500 @ a difference in rate c0.5% for a year (period we were in the fixed rate) = c£657.50 potential loss in interest for Barclays vs c£4,500 charges loss we have incurred.

This for me is not fair and reasonable and is a shocking example of overcharging as the charge forced on us is thousands of pounds more than the actual cost to Barclays.

I understand that such early redemption charges are reflective of a ‘pooled’ cost to the bank and not on an individual basis. However, similarly, if charges are being made on a 3% flat rate, when you consider how excessive Barclay’s charging structure is for all its customers, I don’t accept that Barclays as a bank are levying charges fairly or reasonably and is been done purely for financial gain as not reflective of the actual cost to the bank. This is revenue for Barclays that I don’t accept is appropriate nor is it fair and reasonable and no bank should be able to charge consumers in such an extortionate and disproportionate way.

The FCA “MCOB rules” set out the requirements for disclosure and the basis for early repayment charges and must be expressed as such:

• Be expressed as a cash sum and be reasonable – Now seeing the paperwork which was requested as part of my complaint, it was not expressed as a cash sum and clearly not reasonable.
• Be a reasonable “pre estimate” of the cost to the lender of the customer repaying early – There is no pre estimate of the cost to the lender in any documentation?
• I challenge that Barclays therefore did not meet disclosure requirements.

The “MCOB rules” also say that the illustration and the offer (GIVEN TO THE CONSUMER) must include in relation to the early repayment charge

• An explanation of the charge – We did not receive an explanation of the charge, but now having sight of the paperwork that Barclays says they sent to us, I challenge that this is a small paragraph (the small print) in a mountain of paperwork detailing the terms and conditions and was therefore not clearly or fairly explained or presented to us.
• Examples of the charges – There are no example charges given.

Early repayment charges as a “pre estimate” of cost to the lender:

• If the charge is to be calculated in accordance with a formula set out in the mortgage agreement, it should represent a reasonable “pre estimate” of the cost to the lender of the loan being repaid early – There are no such figures for pre estimate cost to the lender?

Assessing early repayment charges in mortgage contracts

When assessing early repayment charges, FOS also take into account all the circumstances of the case, including:

• The disclosure process – meaning how the charge was brought to the consumer’s attention and whether or not it was done properly; It wasn’t and based on previous discussions with Barclays there shouldn’t have been any future charges!
• Whether the charge has been made in line with regulatory requirements, I don’t think it was, based on FOS’s own technical guidance notes.
• What was discussed about the charge (if anything) at the time of sale; – Nothing but based on previous discussions as part of our first application for our first fixed mortgage with Barclays no future charges would be incurred.
• The documents setting out the charge that were provided to the consumer – We didn’t receive any and only upon making the complaint we asked for sight of these documents.

This means that an early repayment charge must be brought FAIRLY to the attention of the consumer to be binding – I challenge that it wasn’t.

Additional considerations:

• There are other considerations FOS take into account when looking at early repayment charges, such as:
• If the consumer has been misled by the lender about the nature of the effect of the early repayment charge term – and the consumer signed the agreement replying on what the lender has told them – then FOS may consider that the consumer IS NOT LIABLE TO PAY THE CHARGE. – We were misled as we were advised that we would not incur any future charges as would be classed as existing Barclays mortgage customers. We also don’t recall signing any paperwork!

In summary, we were left short of the funds that were needed to purchase our final family home as we had never anticipated such a charge and we had to borrow £3,300 from a family member to be able to complete on our new house. However, that family member needs the funds back and as Barclays refuse to refund it, it's looking highly likely that we will have to take out a personal loan to essentially cover Barclays bank charge, this surely isn’t right.

As consumer champions, if you could offer any help with this nightmare, it would be so appreciated. Thank you so much for any assistance.

Kind regards,

Dave

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