Skipton Building Society may have breached consumer contract regulations when it increased its standard variable mortgage rate for 64,000 borrowers, a firm of solicitors said today.
London-based law firm Leon Kaye Solicitors said it had received advice from counsel that customers affected by the move may have a potential claim under the Unfair Terms in Consumer Contracts Regulations.
The group said it had been approached by more than 100 borrowers who were interested in making a claim against the building society.
It is considering launching a class action in the High Court, while it has also taken up the issue with City regulator the Financial Services Authority and the Office of Fair Trading.
Skipton announced in January that it was increasing its standard variable rate (SVR), the rate customers revert to when their existing mortgage comes to an end, from 3.5% to 4.95% from the beginning of this month.
The move breaks the group's pledge that its SVR will never be more than 3% above the Bank of England base rate, although it reserves the right to remove this ceiling in "exceptional circumstances".
Leon Kaye Solicitors said it had contacted Skipton, who are represented by DLA Piper, with a Letter Before Action. It expects to receive a response within the next 30 days.
The UK's fourth largest building society has around 29,000 customers on its SVR, with a further 35,000 due to revert to it in the near future.
The rate hike will cost a homeowner with a typical £150,000 mortgage £124 a month, or nearly £1,500 over the course of a year.
Several other lenders have increased their SVR since interest rates have been kept on hold, though none has hiked them by the same magnitude as Skipton.
A Skipton Building Society spokeswoman said: "If any legal action were taken, we would deal with it through our normal procedures."Reuse content