Personal Finance

Warning! Manulife Bank ripping off Manulife One mortgage account customers

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[OP]
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Aug 24, 2002
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Warning! Manulife Bank ripping off Manulife One mortgage account customers

This is warning to anyone considering using Manulife Bank for a mortgage.

They have a product called the "Manulife One Account" or "M1" that wraps all your debts in a line of credit secured against your home.

They charge a hefty monthly fee, and market the loan itself at prime rate pricing. For several years this meant paying a more than you would elsewhere for the sake of extra convenience.

When rates rose, they raised the rate on this account accordingly.

But now that rates are dropping, they're doing something sneaky. They've introduced the concept of a Manulife One "base rate" which they are keeping above prime.

I think it's highly questionable that they took the gains when rates were rising, but now fail to pass along the reductions as the rates drop.

Until they reconsider this shady practice, I urge everyone to avoid Manulife. Trust is definitely an open question with Manulife Bank.

UPDATE - NOV 12 2008:

Over the last month I've since tried reasoning with Manulife Bank but have encountered mostly misleading and deceptive responses. The most senior official I dealt with yelled and hung up on me when he realized I was taking notes of his claims during our discussion. Some Manulife officials have openly admitted the loans have always been sold and represented as prime rate, while others are denying this verifiable fact.

Manulife is requesting I send my case to someone they are calling an 'ombudsman'. However I found out that their claimed 'ombudsman' is actually a Manulife employee with a blatant conflict of interest as they are working under the direct compensation and control of Manulife.

It's noteworthy that on the same day Manulife officials were telling me they were losing money, their quarterly earnings report was released showing the opposite.

I would strongly re-iterate my earlier suggestion that customers avoid Manulife. Their initial action doing this was bad, and they have more than enough opportunity to correct the problem.

However their terrible response over the month that follows reinforces that they are not an organization that customers can trust.



UPDATE - DEC 10 2008:

Another month has elapsed and Manulife continues to rip off customers who were tricked by Manulife's bait-and-switch mortgage pricing.

Not only does Manulife continue to overcharge existing customers, they seem to be planning to pocket most of yesterday's Bank of Canada rate cut for themselves as well.

On Dec. 9, Bank of Canada cut the key lending rate another 0.75%, but Manulife has only dropped their rate 0.25% to 4.25%, a full 1.00% above the prime rate which they promised to tens of thousands of customers.

Once Manulife's accelerated compounding charges and high monthly fee are taken into account, the Manulife One account cost is running at approximately Prime + 1.2%.

Putting this into perspective, a family with a $250,000 mortgage is now paying an $2,500 extra this year in unfair interest charges, interest charges about which they were blatantly misled by Manulife. This amounts to Manulife ripping that family off by over $208 per month!

Since this ripoff commenced in Oct 2008, Manulife's conduct in responding to concerned customers and the media show they cannot be trusted. I urge everyone to avoid Manulife no matter what product, promise, or price they try to sell you.


UPDATE - MAR 4 2009:

The Manulife Bank One mortgage customer ripoff continues... and worsens.

While all the other major lenders in Canada passed along the governor's 0.5% rate reduction, Manulife has scammed half the rate cut for themselves. Innocent customers are being over-charged a further 0.25% beyond what their Manulife sales and service people told them they would be charged.

Note that the almost identical product from National Bank is at 2.5%. National Bank - like most ethical lenders - has moved their rate in accordance with their promise to customers and passed on the full 0.50% rate cut. Manulife has not.

When the economy improves and Manulife pretends to be competitive again, I hope consumers remember how dishonorable they were to their loyal customers.
689 replies
Sr. Member
Apr 6, 2007
506 posts
60 upvotes
BoC dropped it's key lending rate 0.5%

All Canadian banks followed with drops of 0.15 to 0.25%

Manulife dropped theirs 0.25% - among the better. Follow along...
Member
Feb 19, 2008
415 posts
4 upvotes
florch wrote: BoC dropped it's key lending rate 0.5%

All Canadian banks followed with drops of 0.15 to 0.25%

Manulife dropped theirs 0.25% - among the better. Follow along...
Pretty sure most banks did .5% to .4%
Sr. Member
Dec 25, 2002
651 posts
215 upvotes
Hmmm. I've noticed that the Canadian Tire One and Only account seems to be doing the same thing (right now they have prime listed at 4.5 and the O&O account at 4.75. Right now we have our house up for sale so we will stay with them because of the open aspect. When we sell/buy new though if they are still above prime then we will be switching too.

The nice part about these products though is that they are open so if their rates start to get unreasonable you aren't stuck with them.

Kelly
Deal Guru
Dec 31, 2005
13306 posts
741 upvotes
squid wrote: Pretty sure most banks did .5% to .4%
No many banks were .25 or less. One of the main statements about the 25 Billion was the hope that banks would move to meet the initial .5%
Deal Fanatic
Jul 1, 2007
8526 posts
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squid wrote: Pretty sure most banks did .5% to .4%
Yup. In regards to the new "base rate", all the major banks have a new rate of P+1 on new HELOCs, however as far as I know they're honoring prime rate on existing HELOCs set to that rate. I think the only way that M1 can get away with what you're saying is if the agreement you sign with them states that your interest rate will be "base rate + 0" and at the time you signed it base rate was equal to prime.
[OP]
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Aug 24, 2002
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Thalo wrote: Yup. In regards to the new "base rate", all the major banks have a new rate of P+1 on new HELOCs, however as far as I know they're honoring prime rate on existing HELOCs set to that rate. I think the only way that M1 can get away with what you're saying is if the agreement you sign with them states that your interest rate will be "base rate + 0" and at the time you signed it base rate was equal to prime.
I'll have to find the agreement and see what the fine print says. But fine print or not, the Manulife One rate has always been equal to prime.

For long periods of time that meant paying a more than the going rate. I was fine with doing so because I was confident I'd benefit later when rates drop.

Except Manulife is trying to play a trick. They liked charging prime when prime was higher than the competitive rate. But now that it's dropped a couple of times, they flip their stance.

A variable rate mortage where the lender creates their own artificial prime rate? Very shady in my opinion.

I'm going to be doing everything I can to make them accountable for what appears to be a bait and switch.

Anyone thinking about a Manulife One account - DON'T DO IT unless they are willing to cross out any fine print about using this special artificial prime rate of theirs!
Banned
Sep 25, 2008
218 posts
Neil wrote: I'll have to find the agreement and see what the fine print says. But fine print or not, the Manulife One rate has always been equal to prime.

For long periods of time that meant paying a more than the going rate. I was fine with doing so because I was confident I'd benefit later when rates drop.

Except Manulife is trying to play a trick. They liked charging prime when prime was higher than the competitive rate. But now that it's dropped a couple of times, they flip their stance.

A variable rate mortage where the lender creates their own artificial prime rate? Very shady in my opinion.

I'm going to be doing everything I can to make them accountable for what appears to be a bait and switch.

Anyone thinking about a Manulife One account - DON'T DO IT unless they are willing to cross out any fine print about using this special artificial prime rate of theirs!
Keep us up to date on this.
Deal Fanatic
Jul 1, 2007
8526 posts
1684 upvotes
Neil wrote: I'll have to find the agreement and see what the fine print says. But fine print or not, the Manulife One rate has always been equal to prime.

For long periods of time that meant paying a more than the going rate. I was fine with doing so because I was confident I'd benefit later when rates drop.

Except Manulife is trying to play a trick. They liked charging prime when prime was higher than the competitive rate. But now that it's dropped a couple of times, they flip their stance.

A variable rate mortage where the lender creates their own artificial prime rate? Very shady in my opinion.

I'm going to be doing everything I can to make them accountable for what appears to be a bait and switch.

Anyone thinking about a Manulife One account - DON'T DO IT unless they are willing to cross out any fine print about using this special artificial prime rate of theirs!
I'm definitely not defending Manulife, as they're a competitor of mine, but all the banks have encountered higher costs of borrowing in the last little while and thus the reluctance to cut rates along with the BoC. Manulife tries hard to get deposits through their high interest accounts and because they have to pay such a high rate of interest they need to keep rates higher.
Jr. Member
Aug 11, 2008
131 posts
kellya wrote: Hmmm. I've noticed that the Canadian Tire One and Only account seems to be doing the same thing (right now they have prime listed at 4.5 and the O&O account at 4.75. Right now we have our house up for sale so we will stay with them because of the open aspect. When we sell/buy new though if they are still above prime then we will be switching too.

The nice part about these products though is that they are open so if their rates start to get unreasonable you aren't stuck with them.

Kelly
I'm not sure about Manulife, but I was told that Can Tire doesn't change their One & Only account rate until the first day of the next month if prime changes.
Sr. Member
User avatar
May 27, 2007
560 posts
4 upvotes
And it's been what? 1 business day since the big banks gave in and dropped the full .5? Maybe 2? I dunno, it's the weekend, I'm not keeping track.

Give Manulife a day to get sorted. Geez. 'warning! scam! ripping off!' People use strong terms with abandon around here.

No, I don't use Manulife, but come on people.
Deal Fanatic
Jul 1, 2007
8526 posts
1684 upvotes
BillyParadise wrote: And it's been what? 1 business day since the big banks gave in and dropped the full .5? Maybe 2? I dunno, it's the weekend, I'm not keeping track.

Give Manulife a day to get sorted. Geez. 'warning! scam! ripping off!' People use strong terms with abandon around here.

No, I don't use Manulife, but come on people.
Haha, thank you for that. Same goes for anyone accusing the two banks who only dropped 15bp for ripping off their customers. It just happened.
Sr. Member
Dec 25, 2002
651 posts
215 upvotes
pdurple wrote: I'm not sure about Manulife, but I was told that Can Tire doesn't change their One & Only account rate until the first day of the next month if prime changes.
Cool! Thanks for the info :)

Kelly
Deal Addict
Aug 7, 2003
2996 posts
173 upvotes
investors group has a All in One, exactly the same as the manulife without the monthly fee. Was at prime, but not sure if they have changed?....
Deal Addict
Feb 1, 2004
1258 posts
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Markham
The .15 to .25% drop announced by everyone on Friday is not effective until Tuesday. Everyone has to wait a day.
Sr. Member
Mar 6, 2007
659 posts
31 upvotes
pdurple wrote: I'm not sure about Manulife, but I was told that Can Tire doesn't change their One & Only account rate until the first day of the next month if prime changes.
I guess it depends on the fine prints; some might change weekly. other might change monthly. As an example, my credit card states
The index is the "Canadian Prime" as published in the "Report on Business" section of The Globe and Mail on the last day of each month. If the index is not published on the last day of any given month, the "Canadian Prime" that was published by The Globe and Mail on the day immediately preceding the last day of that month shall be used
The fine print will tell you, what they consider is 'prime' and how often it changes. Becareful and good luck.
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Apr 14, 2005
1683 posts
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Hi Neil - I am a M1 client as well and am a little startled by the new goofy wording that appears all over their website. I have been a very happy client of Manulife's right up to this stunt.

From the login point for your account they now have this pleasant notice:
[QUOTE]Effective Tuesday, October 14, 2008:

o Manulife Bank's prime rate will be: 4.25%
o Manulife One Base Rate will be: 4.50%

Rates are subject to change.
[/QUOTE]

They never had to quote these two as seperate numbers in the past as they were always matched I guess, but it does seem the seperate terminology has always existed. I have not reviewed my agreement, but I am sure it probably refers to the interest rate being the "Manulife One Base Rate".

I did call this morning to inquire and the CSR I spoke with said they have no intentions of bringing the two in line with one another. They have received a few complaints and questions on it. I encourage you to phone and at least express your complaint if you have not already done so.

Like you, I think I am finally ready to move on. Too bad, because I found M1 to be a very convenient way to bank. There were already a few things going against it and now having a higher interest rate than their competitors makes it an easier decision.
Jr. Member
May 4, 2003
117 posts
I too am a M1 account holder and just got off the phone with a csr. When pressed for their reasoning for not matching the competition i was told "market conditions". i told them that was not an acceptable answer and was provided with the number of their Director of the Treasury to whom i could express my complaints and seek a more detailed explanation. If you wish to express your anger/frustration..., i would suggest calling this person as he is not a "first name" csr but rather an apparent decision maker. his extension is either 244743 or 44743. Either way if you ask for the Director of the treasury you should find your way there.

I did have a look at the prime rate as matched to the M1 Base rate, and this is the first time in 4.5 yrs (that's how long i have been with them) that they have deviated from either a reduction or increase in the lending rates.

I have also expressed how pleased i had been when manulife when it came following the rate reductions in the past when other banks including the big 5 did not do so immediately and found the current tact disappointing.

if you have an M1 account you need to call to express your disappointment/anger... otherwise they will think they can get away with this without any blow back.

my $0.02
[OP]
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Aug 24, 2002
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I complained and after an obviously canned reply, had my case sent to someone for special handling.

The person seemed honest and decent enough, but still spouted the standard doubletalk about 'competitiveness' and 'market conditions'.

I was told that the Manulife borrowing rate always having been the same as prime rate is merely a coincidence.

She says they constantly assess these decisions and that customer feedback to their Treasury department has a good chance of changing their mind.

I expressed doubt that a Treasury department would care much what customers think. However she told me that they initially weren't going to lower the rate at all, but after response from customers last week they decided to make the cut. (I did point out to her that actually so far they have only given half the cut.)

My opinion is we need to still complain and make sure prospective customers of Manulife Financial One M1 mortgage know exactly what kind of tactics to expect from Manulife.

I also find it very disappointing how they marketed this loan as prime rate when it suited them, but at the very instant that it didn't suit them, they pull a bait-and-switch.

It's cold comfort that Manulife only reconsidered this anti-customer policy after being exposed and embarrassed by their customers. And even then, they've only gone halfway.

Citing 'potential' difficulty is also a sham excuse by Manulife. I have half a mind to write in and ask if they can reduce my outstanding balance by a hundred grand. When they ask if I'm having financial problems I'll say "No, but I might be some day in the future."
[OP]
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Aug 24, 2002
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This loophole makes Manulife Financial's "Manulife One Mortgage" not much different than the sub-prime and option ARM mortgages that are blamed for triggering the North American financial collapse.

Manulife One, is not a true variable rate mortgage. It's a mortgage at a proprietary rate that Manulife gets to choose when and however they want.

They conceal this fact by publishing a prime rate that for the purpose of the Manulife One mortgage at least is entirely meaningless.

There appears to be nothing to stop Manulife Bank from deciding tomorrow to jack the Manulife One prime rate up to 5%. Or 10%... or 15%

Would they do it? Who knows, but their conduct of late could be a warning.

In some ways, the Manulife One mortgage is WORSE than the american Adjustable Rate Mortgages (ARM's) since the rate hiking can be done swiftly and customers have no idea what's coming before it hits them. At least with ARM's customers had plenty of notice and they knew how high their rate was going to be jacked.

Some might say that if Manulife goes too far in taking advantage of customers, that borrowers will leave. To an extent that's true.

But in this credit-locked environment, who can do that, and how easily?

Manulife has many customers trapped. They skillfull position themselves as first position mortgagee, and they embed themselves into all your accounts and transactions, making it that much harder for customers to leave.

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