Confusion over Abbey interest rates

Q I had a mortgage with the Abbey fixed at 6.55% from 1998-2003 with a further lock-in period until 2005. They allowed a slight concession on the escape fee but I still paid ?1200 to move to a more realistic rate. On further complaint, mentioning the Ombudsman's ruling they sent a letter offering ?100 'goodwill' in 'full and final settlement'. I have no idea whether the Ombudsman's ruling impacts on my situation at all and therefore whether or not to take the money. I would be very grateful either for advice or notification of where I might get some.

GW

A The sheer volume of letters I receive from borrowers horribly confused about Abbey National's interest rates is depressing - and I imagine that there will be no tail-off even after the ombudsman delivers his ruling, which is expected within a few weeks. The ruling refers to cases where lenders have introduced more than one standard variable rate (SVR), trapping existing borrowers on a higher SVR while new customers enjoy a lower rate. Nationwide, Halifax, Northern Rock, HSBC and C&G have already been rapped for this dual-pricing policy (though in C&G's case, it was new borrowers being denied access to the lower rate).

But Abbey insists it does not operate a dual SVR. Indeed, a sweep through the interest rates published on its website would suggest that the bank doesn't have an SVR at all. Instead there are two basic tracker rates - one at 4.9% and one at between 4.75% and 5%, depending on the size of your deposit. Within each type of tracker rate there are then various discounts and fixed rates cashback loans and a CAT-standard mortgage, and a number of combinations of some or all of these. Not difficult to see where the confusion comes in, is it?

But none of this appears to have any bearing on your case at all. You were tied to an admittedly high fixed rate, and not due to be moved to Abbey's SVR (presumably one of the tracker types) until next year. The redemption penalty you paid would always be payable to escape a fixed-rate loan and is unconnected to the impending ombudsman's ruling. In fact, borrowers tied to fixed rates were excluded from the ombudsman's ruling against the other lenders as they were deemed not to be eligible for any SVR until the end of their fixed term. Of course, if at that point they were denied the lowest SVR available, they would have grounds for complaint.

But in your case, you have been moved to the 4.75% CAT-standard mortgage - the lowest rate Abbey offers, unless you want to take on a new discount or fix. I confess I'm baffled and in your shoes would take the money the bank has offered!