Further boost for borrowers?

An ombudsman ruling is expected soon which, if it goes in favour of a borrower, could benefit thousands of Standard Life Bank mortgage customers.

The case before the Financial Ombudsman Service is linked to the row over so-called dual interest rates which resulted in a humiliating defeat for home loan giants Halifax and Nationwide two months ago.

Standard Life Bank has been caught up in the debacle because the mortgage rate paid by customers with its "Futureperfect" 25-year capped rate home loan is partly based on the Halifax's standard variable rate. Halifax controversially operated two standard variable rates for most of last year - and Standard Life Bank decided to use the higher rather than the lower one when calculating what Futureperfect borrowers should pay.

One unnamed Futureperfect customer has taken their case to the ombudsman, arguing Standard Life Bank should have used the lower rate.

To add to its woes, another Futureperfect borrower has raised a different but related complaint, claiming Standard Life Bank is itself guilty of operating two standard variable rates. Alasdair Nelson's gripe centres on the fact that the "Futureperfect variable rate" he pays is currently 5.7% - yet Standard's variable interest rate is just 5%.

Futureperfect grabbed a lot of headlines when it was first launched two years ago because it was the UK's first-ever 25-year capped rate mortgage. The rate customers pay is based on the average of the standard variable rates of four lenders: Halifax, Abbey National, Cheltenham & Gloucester and Standard Life Bank itself.

The reason things have gone wrong is that in February last year Halifax launched a new lower standard variable rate. Standard Life Bank therefore had to choose which of the two rates to use. A bank spokesman says it decided to use the higher rather than the lower rate because that was the one the majority of Halifax borrowers were on.

But this explanation didn't impress the borrower who has complained to the ombudsman. The spokesman says the bank believes it acted fairly.

If the bank loses the case, the ombudsman could order it to recalculate the borrower's mortgage payments based on the lower Halifax rate and refund the money they were overcharged. This would open the floodgates to compensation claims from other Futureperfect borrowers.

Meanwhile, father-of-two Alasdair Nelson, of north London, who took out the Futureperfect loan in December 2000, claims that when they accepted their mortgage offer there was no mention of a "Futureperfect variable rate" (FVR). He has compained to the ombudsman, saying the bank is operating two standard variable rates and has left him and the other Futureperfect people on the higher one, despite the fact that Halifax and Nationwide lost their high-profile ombudsman cases over dual interest rates.

However, the spokesman says it was made very clear in Mr Nelson's mortgage documentation that the Futureperfect variable rate is not the same as Standard Life's variable rate - it's based on the rates of the four lenders listed above.

He adds that while the Futureperfect mortgage was sold by the bank, it was provided by Standard Life itself, and that this was made clear at the outset.