The banks and building societies offering different mortgage rates should look at the Ombudsman's decision closely

Mick McAteer, Consumers' Association

HSBC, along with other lenders Halifax and Nationwide have been taken to the Financial Ombudsman over dual variable rates, but this is the first decision - and it could have widespread implications.

The dispute centres on two-tiered mortgage rates - when lenders charge higher variable rates for existing customers than for new customers.

It could open the floodgates for other borrowers to complain to the Ombudsman and seek compensation, which could costs banks millions of pounds.

Complaint

HSBC has now paid about �800 compensation to the individual who complained to the ombudsman.

But the bank said the ruling did not make a "precedent" and it would not be compensating other customers in a similar position.

"This does not set a precedent and is about the circumstances of a particular case," said a spokesman.

The Consumers' Association on-the-other-hand has urged anyone who felt they lost out through the introduction of dual variable rates to complain to their bank or building society and - if that failed - to the Financial Ombudsman.

Mick McAteer, Senior Policy Adviser at the Consumers' Association, said: "The banks and building societies offering different mortgage rates should look at the Ombudsman's decision closely.

"We urge them to treat their customers fairly and ensure that everyone benefits from improved deals. If applicable to them, customers' accounts should be moved automatically to the new rate without them having to apply for a transfer."