TENS of thousands of Britons who bought into the dream of owning a property in the sun face repossession and ruin after their "low cost" mortgages turned sour.
They were sold a vision of sun-kissed beaches, world-class golf courses and the "best place to invest in property in the world". But the Greek debt crisis has sent their mortgage payments soaring and many fear that they will be forced to hand back their keys or lose their UK home if they are pursued for money that they owe.
The borrowers' mistake was to follow advice to buy in Cyprus with a mortgage denominated in Swiss francs. Their plight is a harsh reminder of the dangers of opting for a property loan in a foreign currency. Mortgage repayments and the loan value in sterling fluctuate with currency movements. If exchange rates move the wrong way, the costs can balloon with frightening speed.
Swiss franc loans were sold to tens of thousands of Britons and locals by Cypriot banks and their agents in 2007 and early 2008, at the peak of the island's housing boom.
Sarah Hordle, a Cyprus mortgage expert at Essential Consulting, says: "It was very easy to open an account with a bank and Swiss franc mortgages were offered as standard. Many people who bought at the time never even came to Cyprus as bankers and lawyers were flown over to the UK by agents."
The loans were an easy sell as the interest rate was much lower than that available in the Cyprus pound (which became the euro in January 2008) or sterling. Borrowers were asked to pay about 8 per cent on mortgages in Cyprus pounds or Euros while Swiss franc loans offered rates of about half that.
But in the past three years the Swiss franc has nearly doubled in value. Cypriot property prices have also tumbled, trapping those whose only hope is to sell. For borrowers like Ian Boorer, from Plymouth, Devon, the jump in payments has been crippling. He and his wife bought an apartment off-plan in spring 2008 in a golf-course development close to Larnaca.
They were advised by Ellesmere Property Group to take out a Swiss franc mortgage with Alpha Bank Cyprus. Like many loans at the time, this included an initial period, in their case three years, during which they did not have to make any mortgage payments. They were told that when payments did commence, these would be about £680 a month. However, the exchange rate moved against them, so their first payment, three months ago, was £1,100.
Mr Boorer, a 45-year old seismic survey engineer, says: "Our mortgage payments are much higher than we ever planned for and there doesn't seem to be any way out. We have talked about switching to a euro mortgage but that is going to be difficult because we are in negative equity as property prices have been falling and there are big charges for switching."
With hindsight, borrowers piled into Swiss franc mortgages at exactly the wrong time. Cyprus' housing boom occurred just before the credit crisis struck, which caused the Swiss franc to appreciate against currencies worldwide as investors sought to benefit from its reputation as a safe haven in times of crisis. It continued to strengthen as the eurozone problems intensified, which resulted in riots in Greece this week. In July 2007 the pound was worth SwFr2.49. Now it is valued at SwFr1.35, and currency experts say that the trend shows no sign of reversing soon.
Michael Derks, the chief strategist at currency trading broker FxPro, says: "It is said that quality rises to the top, and in the foreign exchange market it is the Swiss franc that is top quality these days. Notwithstanding its meteoric rise, it is difficult to see what might prick the Swissie's bubble in the near term."
As the Swiss franc has appreciated, the repayments on mortgages have risen in sterling terms. You would need £400 to cover a monthly repayment of SwFr1,000 at an exchange rate of SwFr2.50 to the pound. At SwFr1.35 to the pound, your sterling repayment would be closer to £740 a month.
The franc's appreciation has also increased the sterling cost of debt. A SwFr100,000 mortgage would be worth about £40,000 at SwFr2.50 to the pound. With the franc at SwFr1.35 to the pound, its value will have increased to about £74,100.
Paul and Penny Newman, from March, Cambridgeshire, used a Swiss franc mortgage from Marfin Laiki bank to buy a two-bedroom villa in the village of Lania in January 2008. They started by owing SwFr160,000, which was the equivalent of £75,000. They have since paid off SwFrF7,000 but their loan in sterling has mushroomed to £115,000.
Paul, 56, a security supervisor, says: "If it was down to my wife, we would just leave it and walk away but there would still be the worry that the bank would pursue us, which, of course, they would be entitled to do."
Their fate is a warning to anyone using a mortgage to buy a property overseas. Charles Purdy, of Smart Currency Exchange, the foreign exchange specialist, says: "In most cases we would suggest arranging your mortgage in the currency that you are buying the property in. That avoids the problem of your mortgage liability increasing relative to the cost of your property. At no time should you take out a mortgage in another unrelated currency."
The plight of the borrowers has been heightened by the collapse of the Cyprus property market. According to the Royal Institution of Chartered Surveyors, apartment prices fell by an average of 11.2 per cent in 2010, while house prices fell by an average 7.4 per cent. In popular resorts the slump has been even more severe. The worst-hit areas were Paralimni and Famagusta, where apartment prices slumped 23.2 per cent, and Larnaca, where house prices fell by 13.2 per cent.
Nigel Howarth, of Cyprus Property News, says: "Many developments were targeted at the British market and demand has virtually collapsed so there is great difficulty in selling."
The banks have made matters worse by increasing margins and forcing up the costs. Many mortgages are linked to Libor, the interest rate at which banks lend to each other. In 2007 and 2008, when the bulk of the Swiss franc mortgages were sold, most rates were pegged at 1.5 points above Libor, but some are now charging nearly 5 per cent over the inter-bank rate.
Some borrowers can't take any more. Ms Hordle says: "People are handing back keys every day and the first repossession cases are going through the courts."
But that may not be the end of the borrowers' problems. Banks can pursue money through the courts in Cyprus and the UK, putting the debtors' assets, including their homes in Britain, at risk.
Some homeowners are considering legal action against the banks and their agents because they believe that they were mis-sold. Ben Cook, 34, from Malvern, Worcestershire, says: "It is obvious in hindsight that taking out a loan in Swiss francs to be repaid in euros or sterling amounted to financial suicide. We were badly advised and mis-sold in our dealings with the agent in the UK, Alpha Bank in Cyprus and our solicitors in Cyprus, although we don't hold out much hope of getting redress."
Many companies involved have disappeared or gone bankrupt, making claiming compensation very difficult. Mr Cook was advised to take out a mortgage in Swiss francs by a company that became Optimum Overseas Investments Ltd. The Times tried to contact the company but its phone line and e-mail address are dead and it is not registered with Companies House. The banks also argue that the risks were pointed out. Alpha Bank says: "In the cases that the clients decided to apply for a mortgage loan in Swiss francs, they were asked to sign all the relevant legal documents, including declaration letters acknowledging that they fully understand the risks involved in borrowing in Swiss francs."
Bank of Cyprus says: "Bank of Cyprus would have made the customer aware of the possible risks of borrowing in a foreign currency."
But Chris Christofi, of Healys, a company of solicitors in London, believes that there may be grounds for action. He says: "It seems that a fair proportion of mortgage applications were submitted by intermediaries, usually the developers or their agent in Cyprus, and many of these included false information as to the amount of deposit paid, earning ability and so on. We are looking at using this as a basis for having some loans declared void.
"The biggest problem is convincing the banks in Cyprus who have given mortgages in Swiss francs that they should perhaps revert to sterling/euro-style mortgages backdated to the commencement of the loan because I think many people would be happy with that."
Anyone who buys a property overseas should remember some basic rules. Always seek specialist advice from independent solicitors and surveyors before buying. Some developers will wheel out lawyers who they claim are independent, but you should find your own. If you don't speak the language, make sure all the paperwork is translated into English by a reputable translator, preferably one who can compensate you for any material inaccuracies. To find a lawyer proficient in the law of your chosen country you could contact The Law Society (lawsociety.org.uk).
Case Study: 'I owe more now than I started with'
Peter Thompson, a boat pilot on the Thames, regrets the day that he decided to buy a two-bedroom holiday home in the Cyprus resort of Pernera with a Swiss franc mortgage. He says: "The mortgage was recommended to me by the personal banker at the Paralimni branch of the Bank of Cyprus because the interest rate was so low compared with a euro mortgage. They said that the repayments could fluctuate with exchange rates but they didn't really emphasise the potential risks. In my wildest dreams I never imagined what would happen."
The 53-year old, from Beckton in London, bought the property in June 2007 with a loan of SwFr 238,000. At the time you got 2.5 Swiss francs to the pound. Four years on, the Swiss currency is 1.35 to the pound, which has had terrible consequences for Mr Thompson. He says: "I've made nearly £50,000 worth of payments but, when you convert what I owe in Swiss francs back into sterling, I owe nearly £15,000 more than at the start."
Mr Thompson has talked to the Bank of Cyprus about switching to a euro mortgage but has been told that he will have to pay hefty exit penalties. "It has become a millstone round my neck," he says.
Nath,
Your question with regards to how much a salesperson should know about a product before they’re qualified to sell it is one which, in certain industries like financial services (complicated “structured” products, immediate payment, deferred benefit), is enormously difficult.
If people, including the bank salespeople, actually knew what they were really buying into when the opened a simple current account (RECOMMENDED loan to asset ratios being OVER 100%, Depositor Protection Schemes being more hot air than anything else – for scary bedtime reading have a look at the European Forum of Deposit Insurers website and look under Cyprus!!!), they would keep their money under the bed!
Actually, they wouldn’t due to inflation, but they certainly wouldn’t touch banks…
Bottom line re: the Swiss Franc loans is that the bank actuaries who set up the loan deal constructed a product that was easy to sell because it was cheap – period. The reasons they were cheap were not fully explained as the people selling them didn’t know. The semantics on whether the salesperson should have known if they’d done their homework etc. is something you are far more qualified to deliberate on than me! Any action against the banks will have to prove this.
The Swiss Franc was presented as being strong and stable (which is all true) and very few, with the exception of the actuaries, actually realised that that is why it wasn’t a good idea to borrow money in. Indeed, it’s the CHF’s inherent strength that made it eventually such a bad investment for those whose earning currency was not CHF.
This massive conspiracy that is the Cyprus property market has many problems far in excess of the Swiss Franc loan deal. My personal belief is that the CHF loan bit was not part of the conspiracy.
However, I could be wrong…
@Richard – presumably that UK solicitor is bringing a class action in the UK.
Odd Job Bob
If you knew what I did for a living you would realise how ill judged your comments are about me not understanding duty of care.
Your car showroom analogy is an over simplification of the process, we did not opt for the mortgage in isolation. It was just one of the many aspects of the sales information that we were told and when it was all put together it looked like a good investment to us and hundreds of others.
You state that it is likely that the advisers would not understand all the complex issues surrounding the CHF. If as you claim this is beyond their training and knowledge should they be advising on it?
You commented that professional negligence is if “he knew what he was saying was not true”, in fact that would be fraudulent misrepresentation. Not to be confused with negligent misrepresentation where somebody states something that is not true and they would have known it was not true if they had undertaken adequate care and due diligence.
At least we agree that English tort law is not nonsense!
At the end of the day the CHF mortgage is only one of many issues that an awful lot of us have with our Cyprus investment and when you line them all up you may then understand why some of us get a bit animated about things…
Nath,
I think you’re misunderstanding what Duty of Care means, as well as giving so called advisers way too much credit for their professional abilities.
Firstly, let’s look at your statement that you were only presented with one option.
If you wanted to buy a car and went to a vast showroom, and the car salesperson directed you to only one window (as he was only authorised to sell products from that window) in which there was only one car, would you buy it?
If you did buy it (hopefully you would walk away and shop around) and it turned out to be rubbish, whose fault?
Secondly, with regards to duty of care, I could be the most trustworthy adviser in the world, warn you of all the risks in an investment THAT I UNDERSTAND, look at your affordability and financial situation until we’re both blue in the face, but if I’ve only got one product to sell and, due to my level of competence, there is nothing that screams out its unsuitability to you, guess what product you’re gonna get?
Would your adviser have understood the complex relationship between a tranche of Swiss Francs bought at a certain rate over a certain period of time, based on their at the time low exchange rate to the £? Would he have been able to make an assessment on the long term prospects for the UK and Swiss economies and thus the rate of the £ to the CFH at some future date? If you are expecting your mortgage adviser to do all that, then you placed FAR too high a faith in him.
Have you ever bought a fixed rate mortgage? Did the adviser tell you that it was lower risk than a variable rate? He told you this ‘cos that’s what he is told.
What he didn’t tell you is that the bank actuaries make a prediction of what they believe average interest rates over the period will be and then charge YOU a fixed rate above that. The low risk with the fixed rate is that it is thus GUARANTEED to be a bad deal for you (hence no speculation!), compared to what the predicted average will be (if they’ve got their figures right, that is, as predictions aren’t set in stone).
Why does the mortgage adviser not tell you this? Because it’s a few levels above his pay grade and he just doesn’t know.
It is thus only professional negligence, “by-passing†duty of care blah blah if he knew what he was saying was not true and what he had was inappropriate for you. However, he’d have to be the person actually designing the product (i.e. seriously up the food chain than just a front desk, low-franchise level loan bod’) to know.
We can then get into the argument of, “Are all structured products (i.e. ones in which someone has made a prediction and then sold you a product which seems to shield you from risk but is actually set at such a price to be virtually guaranteed to be rubbish for you) not very good then?â€Â
The arguments about this one can go on forever. I actually believe they aren’t very good, but people seem to like ’em…
Lastly, of course English tort law isn’t nonsense. As much as I sympathise with your predicament, saying an investment is bad advice because you played 3-exchange-rate poker and lost, is.
@Nigel Howarth – from a UK solicitor with a disgruntled client who purchased in Cyprus.
@OddjobBob – I’m not surprised to hear the shareholders are all that matter in the banks. Probably explains why so much of society is going the way it is – and why the uprising in Egypt could probably end up happening elsewhere.
Fact is the ‘advice’ was thin, poorly explained and even more poorly executed.
If this (& other fiscal crises worldwide) resulting in ordinary people losing money through attempting to make a bit better lives for themselves & their families worsen – I think eventually those shareholders had better think about keeping a low profile.
Nigel
“Product, product, product”… hmmm sure I’ve read that somewhere before?!?
Odd Job Bob
So now it is OK for advisers to recommend products even if they are not suitable for a client as long as they get their loot? Nice…
The whole “Duty of Care” thing obviously by-passed you didn’t it? Our decision to invest was based on all the information provided, no alternative to the CHF mortgage was provided, lots of positives for going for it were. A UK adviser has “fiduciary” responsibilities to their client i.e. clients place their trust, loyalty and confidence in their adviser who is far more knowledgeable than they are about these matters and so rely on the advise given.
Professional negligence could arise if for example an adviser,
– failed to warn of the risks of an investment
– failed to establish whether the client could afford the investment
– failed to assess a clients needs and financial situation
to name but a few…
Maybe you just think the English tort law is nonsense too?
Nigel,
I agree that keeping the customers happy helps maintain the business (and you can keep on trading).
But the guy was not saying that. He said that, to a bank, all else is a complete irrelevance: the customers, the staff, the product. Only thing that mattered was the bottom line. It was explained to me by someone high up the food chain that the following calculation is made DAILY: if we as a bank were to sell off everything and put the money on deposit, would we make more money than we do now?
If the answer was yes, then we would all be out on our ears. Simple. I got a bit fed up of having a cost-income-ratio tattooed on my forehead…
I disagree with the PD saying it’s all about the product. In all honesty, the quality of the product that so many people have got themselves lumbered with is scandalously poor. In fact, if it were about the product, off-plan sales would never have reared its exceptionally ugly head (glad it’s almost dead now). The property market here is/was about selling lifestyles: some people didn’t actually see the product until many years after the money was paid. Some still haven’t seen it…
The reason I appear to be defending the banks over this Swiss mortgage issue is that they saw a product people would like (due to cost) and they flogged it. People didn’t understand it but did it anyway, due to cost. If the CHF loan were more expensive, NO-ONE would have done it. If the Swiss Franc had decreased against the £, NO-ONE would be complaining now. With the benefit of hindsight, one could say that a bad investment MUST equal bad advice, but I see this as too easy a cop-out for people simply making the wrong, bitterly expensive, call. The Cyprus property industry is guilty of many, MANY sharp practices, but this mis-selling accusation is not one of them.
@Odd_Job_Bob – the focus of any commercial company is to keep it’s shareholders happy; if there were no investors, there would be no company.
However, if a company does not treat its customers correctly, they will take their business elsewhere. This will eventually cause a downturn in the business and the shareholders will become unhappy when the value of their shares, their dividends and the company falls.
Interestingly I saw one article in which a property developer said the company’s focus was on “product, product, product” – what about that?
Nath,
I take all your points on board and I really do sympathise.
However, even though this will be of no comfort, let me tell you a little story.
I was at a manager’s meeting several years ago of a very well known bank in the City. It was at the time when the old, established and reputable English Bank was being taken over by their Hong Kong based larger big brother. We, the Brits, were all a bit scared as we didn’t know what to expect.
One of the HK Bigwigs gave a speech which was all bland nonsense. One of our guys got up to be a bit of a clever clogs and asked the question: “The strength of a company can be determined by 3 groups of people: the staff, the customers and the shareholders. In which order of importance would you put these?â€Â
Without any hint of a smile, the HK guy said, “No 1 shareholders, no 2 shareholders, no 3 shareholdersâ€Â. That certainly told us!
If you are dealing with a tied agent, of course he will sell you his company’s product, irrespective as to whether it’s the best for you at the time. Even if you are dealing with an independent broker, he has a panel of product providers who pay him extra commission depending on how much business he gives them (they call it volume override).
The FSA, with their self-regulation nonsense, are just trying to cover their tracks. Non-commission earning sales staff are now, based on turnover, rewarded by bonuses which are, you guessed it, commission by another name. To be really best advice-orientated, you need to get rid of tied-agents completely (but here’s a much more complicated situation that we won’t go into here).
I’m sure your adviser must have done his due diligence (he says) but there is a limit to what the guy can predict. Was the Swiss Franc stable at the time: yes. But compared to what? To Sterling? Probably. Could he have foreseen that the £ would lose virtually half its value to the CHF? If he could, he wouldn’t be working as a salaried employee for a bank, that’s for sure!
As harsh as it may sound, it was up to YOU to decide if a three way exchange rate punt was a risk you wanted to take. I’ve no idea if your guy misled you, but the reason interest rates for CHF were significantly less than for the Euro (or Cyprus £) was because their price readjustment had been FACTORED IN by the people who acquired that tranche of Swiss Francs over the time-scale that the money was available to you (which is why fixed rates are such a con, but that’s for another day). If something is unusually cheap, there is always a reason. As Mike says below, there’s no such thing as a free lunch.
Odd Job Bob
So “getting commission is the main aim” for you?
Presumably you don’t work in the UK where soon the FSA will be implementing legislation to ban commission for advisers. “Commission bias” has been blamed for several high profile mis-selling cases where advisers have been accused of recommending products that pay the highest commissions, rather than those most suitable for the client.
A financial adviser has a legal duty of care to exercise reasonable care and skill when providing a client with advice.
For example, they would not make any false or mis-leading statements about an investment and ensure they had undertaken their due diligence and were 100% sure that the advice and documentation they provided was correct.
In our case the investment was classed as LOW risk by the agents and I have the paperwork to show that and all the reasons why it was classed as such… one of which being the excellent mortgage facility. The due dilligence was “second to none”….. etc etc.
Not sure where that fits in with the “risk reward relationship”?
Does anyone else find it incredible that the guardians of financial services in the UK wash their hands completely of any problems with investment advice or recommendations (negligent or otherwise) provided BY firms that they are responsible for regulating TO citizens residing in the country location that they regulate??? Answers on a postcard please …
Robert, you are not being fair!
Everyone must have sympathy for those whose mortgage costs have doubled, but I have sat on the other side of the desk. I agree that getting commission is the main aim (hey, it’s a business!), but as a representative of a company with a product range to sell, the very last thing in the world you are is impartial.
With every investment decision, we make a risk reward calculation. We’ve all got better odds on horses with little chance of winning than we’ve done on the favourites. But yet we still back them and sometimes they win.
And what is a duty of care to clients? Is it making decisions for them? On what basis could the adviser do that as his crystal ball isn’t any better than anyone else’s? I’ve had situations when clients have been upset (actually threatening to sue!) as an investment has gone really well and they didn’t put more money into it (despite my recommendations. I had to provide them with written documentation proving that they didn’t want to invest more before they called their lawyers off!)
So what if an adviser had warned against CHF mortgages and the Swiss Franc was now at CHF5 to the £? Would clients who hadn’t taken out Swiss Franc mortgages be threatening to sue the banks? I bet you some would…
An investment in a country where the currency is different to the currency in which you earn carries an exchange rate risk – we all know that. To take out a loan in a third currency is really playing with the BSD’s (Big Swinging Decision-makers).
If the only option being presented (as that’s all that was in the product range) to buy your property in the sun is one you do not understand (if one believed one could have half the cost but no downside then you didn’t understand) or you do not like, then DON’T BUY IT. If people truly believed that they could take out a loan at half the normal interest rate with no increase in risk, then they chose to forget the risk reward relationship.
I’m hearing stories that a class action IS in progress against Alpha Bank – as “these documents” they insisted everyone signed – some were in Greek – and most were just nakedly indemnifying themselves against any form of come-back.
The whole stinky business was orchestrated by the greedy for the greedy – right from the get-go. British people like property – the Cypriots knew that – so make the process ‘appear’ like the UK.
Hook, line and sinker! Got ’em. The brokers were in on it. The lawyers were in on it. The bankers were in on it. The Gov’t loved it and stood by and let it happen.
Now – it’s 3 years on – they (like it or not) are EU members and have a code of conduct to adhere to.
The need for clarity and properly orchestrated action is now.
Incidentally – what’s the story with Conor – all gone a bit quiet?
While I have a lot of sympathy with the buyers caught up in the foreign currency trap, there is an old saying that if something looks to good to be true, it usually is. I would guess that most of the buyers using Swiss Franc mortgages could have, if they had tried, got a £CYP or £Sterling or Euro mortgage, but they didn’t, because the Swiss Franc deal looked so good. The fact is that the good old British Pound has been going down the tubes for a long time and people just don’t take notice of that. The pound was devalued in 1967 (Harold Wilson and his Chancellor James Callaghan – “this won’t affect the pound in your pocket”), fell more than 10% in the 1970’s under Margaret Thatcher then rose again in the early 1980’s because of political meddling (Chancellor Nigel Lawson) that led to the collapse of the housing market. Then in the late1980’s, when the politicians messed up again and the pound was devalued and left the European Exchange Rate Mechanism (announced by John Major and his Chancellor Norman Lamont on Black Wednesday 17 Sept 1992). This is the real reason why the UK has never adopted the Euro; we cant keep to monetary targets and make everything seem OK by devaluing the Pound.
Mike’s comments, while they may be unpopular, have hit the nail on the head, which cannot be said of Chris Christofi’s contribution and I quote:
“The biggest problem is convincing the banks in Cyprus who have given mortgages in Swiss Francs that they should perhaps revert to sterling/euro-style mortgages backdated to the commencement of the loan because I think many people would be happy with that.”
The Pound has been going down the tubes for over 50 years and expat pensioners and workers paid in Pounds know all about that. No one has bailed them out, because outside the UK the nanny state does not operate; there is no bailout. Now the Euro interest rates are rising, we could eventually be looking at 1GB Pound = 0.9 Euros or even less. Then the fun will really start.
Please note, that these people are driven by “commission”, to the exclusion of honest and impartial advice including duty of care for their clients!
Hi Nigel Howarth
I have tried this a couple of times but unfortunately the FSA stated that overseas investments are not regulated by them so their hands are tied. However, we are pursuing other routes.
We bought our apartment through BMS Homes (now defunct) and as far as I was aware at time the CHF mortgage was the only one on the table…yes we were told this was the one to go for because it had the best rates etc etc but we were certainly not alerted to any of the potential pitfalls or given an alternative quote.
With hindsight yes I was extremely naive but I was putting my trust in the ‘experts’ who were guiding us through the process.
Surely the banks are going to have to look into this and renegotiate aren’t they…otherwise they will have thousands of us defaulting and end up with loads of properties worth far less than their book price and with no one willing or able to repurchase them.
Sounds like a worthy campaign for CPN to take up I’d say?!!!
Hi Mike
Just to clarify a few things. In our case (and those of many, many more people I know of) the CHF mortgage was the ONLY one on the table. It was presented to us by an FSA regulated IFA as the best/safest/only option.
This was because “it was the most stable currency in the world”, “had exceptionally low interest rates” all meaning that “repayments would fluctuate very little over the term of the mortgage”. Our proposed repayments (we have no completed property yet) have in fact more than doubled from the original quotation provided and continue to rise.
At no time did anybody explain the risks and we certainly did not sign any documents saying that the potential risks had been explained to us.
This is only one of many issues I and many, many others have. If you knew the full story (which I’m not going to go into here) you may think that the idea of just accepting it as a bad decision is a tad harsh?
@Nath – if your IFA is (was) regulated by the FSA you should complain to the FSA and make a claim against him/her. If you are successful but the advisor is unable to meet the claim the Financial Services Compensation Scheme (FSCS) may be able to assist.
I will be shot at for this but it must be said.
I have every sympathy with the predicament Swiss Franc mortgage holders face. It was however surely a choice based on cost.
My wife & I were offered a Swiss Franc mortgage in 2007 on a property in Latchi. Sure the costs appeared enticing but after consideration we decided against it exactly for the reasons now evident.
We were offered the mortgage in CY£ or Swiss Francs and although I agree the Franc was far far cheaper we were aware that there is no such thing as a free lunch.
It may be that in business my wife trades in Yen and I trade in the Euro and US$ & we may have slightly more aware.I would find it difficult however to believe that the Swiss Franc mortgage was the only offer on the table with those that accepted it, surely it was a choice of CY£ or Swiss Franc which would then indicate a personal choice perhaps to facilitate affordability at the time which was not possible in CY£ & therefore alarm bells should have rung.
Foreign Countries do not, in the main, operate a cosseted nanny state that breeds a dependant society as we do in the UK. We have to take responsibility for our own actions and make our own way in life accepting the good and bad decisions we make.
Saying that however if a Swiss Franc mortgage was the only offer made then that would have clearly been mis-selling and a sharp practice to ensure the property appeared far more financially attractive to an investor than it actually was. Again however we can always say no.
I sincerely do sympathise with those now in difficulty as the lesson may be now crippling and we must always remember behind every tragedy like this there is a family in turmoil. I apply a simple philosophy to this kind of situation – if I have to sit down and work it out & think about it too much then I cannot afford it so forget it.
@Gerry Thompson – This problem is due to your lawyer failing to protect your interests. He/she should have got a title search at the Land Registry, which would have highlighted the mortgage problem.
A bank will not disclose information about its other clients to you – this is confidential.
Check out the Cyprus Property Action Group website at http://cyprus-property-action-group.net/consumer-protection-service/ on how to complain to the Cyprus Consumer Protection Service.
@Ian Kinder – Please see https://www.news.cyprus-property-buyers.com/2011/01/28/city-law-firm-to-protect-cyprus-buyers-rights/id=006686
Those responsible, who colluded in stitching these people up I would love to give them a choice. Either give full compensation to your clients, or have your right hand chopped off!
I also was misleadingly sold a Swiss Franc mortgage in Paphos Cyprus,and am now paying over double the amount of monthly payments which are soaring by the month, Has anybody been successful in trying to make the banks or developers offices accountable for their mis-sold mortgages and how, as I will have to do something because I cannot carry on with the crippling payments.
Regards
Ian Kinder
I put my case to Alpha Bank regarding holding information back and not informing me of the dangers of the Swiss/Euro currency or that the developer had a mortgage also on the building/land.
Alpha bank replied with the reason I was not informed was and this pasted from email dated November 2010
Anyone out there can confirm that the bank can hide behind that statement can you please let me know?