More gripes for Halifax

Halifax 'dual rate' borrowers could be entitled to more money following a successful challenge by two Ob server readers over the way the lender calculated their refund.

Barbara and Bill Hulse threatened to take their case to the Financial Ombudsman after being offered £220 to compensate them for extra interest paid from 2 December, when they put their complaint in writing to the bank. The Hulses believed the compensation should actually be backdated to March 2001, when they rang a Halifax helpline to find out if their discounted mortgage would be transferred to the new lower variable rate.

Mrs Hulse, who has used Halifax accounts for more than 35 years, says: 'The person to whom we spoke told us the rate was not available to us and despite our protestations we did not think there were many options open to us at that stage. It was not until customer protests gathered momentum later in 2001 that we realised we had a good case, and put our complaint in writing.

'As far as we were concerned, our telephone call was a request to transfer and the only mistake we made was not keeping a record of the person's name and date. There must be many customers in a similar position to us, who made a telephone inquiry and initially accepted the bank's position, while inwardly seething with indignation.'

Mark Hemmingway, a spokesman for the Halifax, admits the lender miscalculated the interest that should be refunded and says the Hulses will now receive a cheque for £532.92. He says that the Halifax calculates the refund due from the earliest point at which it can be proved a borrower asked to transfer to the lender's lower variable rate, whether they contacted the lender by phone or letter. Calls made to Halifax Direct were recorded, while electronic notes were made of calls to the lender's business centre or branches.

Thousands of angry Halifax borrowers are continuing to take cases to the ombudsman despite the bank's attempt to settle the issue. The Halifax originally faced complaints because it introduced a new lower variable rate for 'loyal' customers in March last year, but borrowers with capped and discounted loans had to pay interest linked to a higher variable rate.

The ombudsman assessed a test case and ordered the lender to compensate the complainant back to the date on which he asked to transfer to the new lower rate, plus £150 for inconvenience. The Halifax was also told to link his mortgage interest to the new lower rate.

The Halifax announced that it would compensate 10,000 borrowers who complained before 31 January in the same way, while those who complained during February would get £100. Those complaining later would receive nothing because the lower variable rate was no longer available. In contrast, Nationwide building society agreed to refund all the extra interest paid by affected borrowers since the introduction of its lower variable rate, while HSBC has been compensating individual borrowers in full if they complain to the bank.

Far from settling matters, the Halifax's action has spurred further complaints. The ombudsman's office says its inquiries desk has received thousands of calls in the past few weeks, and the ombudsman is already actively investigating more than 1,000 cases brought by customers of the Halifax and the four other lenders that introduced different variable interest rates for different types of borrowers.

Borrowers must initially take their complaint to their lender, which has up to eight weeks to settle the issue before the complainant can go to the ombudsman.

If you believe you may be entitled to a refund of interest or want further information about how to complain contact:

· The Halifax - write to Customer Relations (Ombudsman's Decision), Halifax plc, PO Box 557, Halifax, HX1 2ZX

· Nationwide is compensating all affected customers automatically, but if you are still concerned call 08457 302010

· HSBC - write to Customer Relations Manager, HSBC Bank, Mortgage Service Centre, PO Box 1546, Sheffield S1 2UJ

· Abbey National is appealing against the ombudsman's initial ruling. The appeal result is expected in the next few weeks. Call the helpline: 08457 141512

· Cheltenham & Gloucester is awaiting an initial ruling. Write to Mortgage Service Department, Cheltenham & Gloucester plc, Chief Office, Barnett Way, Gloucester, GL4 3RL.