Reply to the Parliamentary Commissioner
for Standards from Mr Duncan Wiggetts of Herbert Smith
As you are aware from our previous discussions, the
principal concern of our client, Britannia Building Society, is
the duty of confidentiality it owes to its members, which prevents
it from revealing any information concerning its customers. We
would stress that our client is treating Mr Mandelson in this
respect no differently from any other member.
In your original letter of 29th March, we were informed
that you had been asked to investigate whether Mr Mandelson had
received a concessionary mortgage from the Society. As we stated
in reply and I repeat now, Mr Mandelson was not given a concessionary
mortgage nor was he afforded any special or preferential treatment
whatsoever in his dealings with our client. His application was
dealt with commercially at all times.
So far as our client is concerned, that should be
the end of the matter and we cannot understand why we are being
asked to provide any further information or how this comes within
the remit of the relevant Committee particularly when, in providing
the information requested, our client would be acting in breach
of its obligation to maintain confidence over its dealings with
Nevertheless, in order to assist the Committee and
to bring this matter to an early close, so far as our client is
concerned, we have sought the consent of Mr Mandelson to provide
answers to the questions raised and he has agreed that we can
1. The Branch Manager asked Mr Mandelson
only the questions stated on the mortgage application form which
the Branch Manager filled out in accordance with Mr Mandelson's
instructions and which Mr Mandelson then signed. Mr Mandelson's
replies were recorded in full on the form:
"D1 Have you any HP/loan agreements? No
D3 Have you any further outstanding commitments
including maintenance payments? No
D5 Do you propose to borrow any other money
upon security of
the property to assist in the purchase? No"
2. Beyond the questions on the mortgage
application form, Mr Mandelson was not asked anything else.
3. & 4. Mr Mandelson told us at interview
that he thought he had mentioned this as there was no reason for
him not to reveal it (as it was going to be paid off out of the
sale proceeds of his Wilmington Square flat). The Branch Manager
told us at interview that he would have recorded the Hartlepool
mortgage if he had been told about it, as it would have been relevant
5. No (see answers to 3 & 4).
6. The Branch Manager did not recall
specifically informing Mr Mandelson of his ongoing duty to keep
the Society informed of material changes in his circumstances.
However, the 'Instructions to Solictors' form contained an express
provision for the Society's Solicitors to inform it if there had
been any material change in the circumstances of the transaction
(a duty which is implied in any event). The reply to question
number 9 also refers.
7. The Branch manager assumed so.
8. (a) In a reply from Wegg-Prosser
& Farmer on 19th January 1999 to the Society's ongoing enquiries.
(b) The Society first knew of the loan when the
story broke in the media22nd December 1998. However, it
was not aware of the terms of the loan until, again, the letter
from Wegg-Prosser & Farmer of 19th January.
9. Yes, for all matters connected with
this mortgage. To the best of the Society's knowledge this was
the first time Wegg-Prosser & Farmer had been instructed.
It is the Society's usual practice to instruct the applicant's
Solicitor to act for it in connection with the mortgage. As a
result of our review of this matter for the Society, Wegg-Prosser
& Farmer have been removed from the Society's panel.
Finally, we should re-confirm that we were instructed
to carry out a thorough review of this matter for our client and
that we found there to have been no deliberate intention on the
part of Mr Mandelson to mislead our client in respect of this
mortgage transaction. Furthermore we reported that there was no
risk to our client at any time. Our recommendations were accepted
by our client which has now closed its file on this matter.
5 May 1999