The cap is the upper limit to which a lender can increase its SVR. When Santander raised the cap it should have given affected borrowers clear information in easy to understand terms. But the letters it sent were not clear so borrowers may not have understood what was going to happen, how this was going to affect them and the options open to them. Some borrowers did not receive a letter at all.
Santander will be sending letters, in batches, to affected borrowers from 22 April 2013 until Autumn 2013. They will provide a summary of what happened, what should have happened, and invite the customer to complain if, for example, they feel they have lost out financially.
While a large number of people will be contacted it is likely that only a minority of borrowers will be entitled to redress. This is because redress largely depends on whether customers could have moved to a better deal. However the letters will give customers the chance to understand what happened in 2008 and if they were affected. Whether borrowers have lost out financially will depend on the circumstances of their case.
Santander has agreed to set up a dedicated phone line to help customers that have any questions; letters to affected customers will include this phone number. The FCA has also published information to help consumers better understand how they complain and how the firm will evaluate the complaint. Santander has also put information online www.santander-products.co.uk/capmargin
That the 2008 communications were not clear came to light during the Financial Services Authority’s (FSA) ongoing supervision of the firm. The FSA was the predecessor to the FCA.
The SVR is the rate of interest that mortgage borrowers move on to after an introductory deal, such as a fixed rate mortgage or tracker mortgage, comes to an end.
The FCA, and previously the FSA, began regulating mortgages on 31 October 2004.
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