Northern Ireland Attorney General Accuses Bank Of Scotland Of Committing Mortgage Fraud
John Larkin QC, Northern Ireland’s Attorney General, has accused the Bank of Scotland of committing mortgage fraud in relation to the way that the bank has treated customers who fell behind on their residential property mortgages.
An earlier court hearing had previously ruled that the Bank of Scotland had unfairly re-billed some of their own customers who had fallen into arrears with their mortgage payments.
The Bank of Scotland had decided to appeal the verdict of the earlier court hearing but decided to drop that appeal on Monday morning. The Bank of Scotland then rejected Mr Larkin’s claims, saying it strongly takes issue with the allegations.
A barrister for the bank, Stephen Shaw QC, said Mr Larkin’s view of mortgage fraud was “based on a misapprehension”.
The Bank of Scotland is a major mortgage lender in Northern Ireland under the Halifax brand, but is ultimately owned by the Lloyds Banking Group.
Mr Larkin was in court for the hearing and acknowledged that it was extraordinary for him to intervene in matters of private law between a bank and its customers having said the original, scathing judgement was unduly tender on the bank, after telling the court that there was evidence of “criminal fraud under the 2006 Act” and that the matter has now been drawn to the attention of the police.
The original court case focused on the way the Bank of Scotland had added arrears to the initial mortgage borrowing, considered a standard practice for tackling arrears and is otherwise known as capitalisation, increasing a borrowers’ monthly repayments.
The judge ruled that once capitalisation had taken place, the mortgage should no longer be considered as in arrears, but the bank continued to treat such mortgages as in arrears, and used that as the basis for bringing legal cases. This is the point that Mr Larkin is using to accuse the Bank of Scotland of mortgage fraud
However, the judge ruled that this meant borrowers had been held in fear and threatened with property repossession on account of an “erroneous and fictional arrears balance”.
In a statement issued after the court hearing, a spokesperson for Lloyds Banking Group said: “There have been no allegations of mortgage fraud in these cases. We strongly take issue with any implication that this is the case. We have offered to meet with both Housing Rights Service and the Attorney General in order to correct the assumptions on which these allegations have been made. We no longer believe that an appeal is necessary in this case and as such have withdrawn from the appeal process. We would reiterate that repossession is always a last resort. We work hard to ensure that we are providing customers facing financial difficulty with the right support to help ease their circumstances and ultimately help to resolve the situation in what we appreciate is an extremely sensitive time.”
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