C&G pulls its 6% rate

By JO THORNHILL
Updated:

 

CHELTENHAM & Gloucester has reacted to the Financial Ombudsman's ruling against the Halifax and its two-tier mortgage rates by pulling the plug on its own cheap lending rate.

Around 200,000 of C&G's customers will no longer benefit when the lender, part of the Lloyds TSB Group and among the largest providers in the UK, withdraws its 6% variable rate.

C&G was in the process of writing to those customers not already on a special discounted, capped or fixed rate deal to invit them onto its new lower rate. This will now be stopped and all customers will remain on the 6.75% standard variable rate.

C&G followed Halifax by introducing the two tier rate system back in March this year. But last week the Ombudsman ruled in favour of a Halifax discount borrower, Chris Wright. He had argued he was treated unfairly by the bank for not being put on the lower rate.

Although Halifax is appealing against the decision, C&G has already acted and said it will remove its rate. It said it would put the 6% rate back in place if Halifax were to win its appeal.

C&G customers who have already been switched to the lower 6% SVR will be allowed to continue on the rate, but the phased transfer programme - in which eligible customers would be allowed to switch on to the lower rate after their discount deals ended - will be suspended.

Abbey National, HSBC and Nationwide, along with Halifax and C&G also offer a similar two tier mortgage rate system.

Read more about the Financial Ombudsman's ruling over Halifax here: Rates row compensation hopes

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