The FCA has published an undertaking from the Co-operative Bank (t/a Platform), relating to a term in its mortgage agreement, and agreeing to amend the term on the grounds that it contravened the transparency requirement of the Consumer Rights Act.
The term in question related to any additional borrowing allowed under the mortgage agreement, and stated that “[i]f we agree additional borrowing, it will be charged at the interest rate applicable at the time”. The FCA noted that this term is ambiguous in effect, as it does not make clear to customers what interest rate they would be charged.
Platform agreed to amend the term to state that the interest rate charged for additional borrowing will be based on the firm’s range of additional borrowing rates, as set out out on their website. The new term also explains that the applicable interest rate could be higher than the existing interest rate the customer is paying for their main mortgage account.
Platform’s remediation exercise has to date led to an indication that approximately 1,200 consumers may have been affected by the unclear term, and consequently should be paid an estimated £3.4 million in redress.