Endowment mortgage Decision Reference 2024-0028

• Jurisdiction: Ireland
• Case Outcome: Partially upheld
• Year: 2024
• Reference: 2024-0028
• Date: 27 February 2024
• Subject Matter: Endowment mortgage
• Finantial Sector: Investment
• Conducts Complained Of: Failure to advise on key product/service features,Delayed or inadequate communication, Mis-selling

Decision Ref:

2024-0028

Sector:

Investment

Product / Service:

Endowment mortgage

Conduct(s) complained of:

Failure to advise on key product/service features

Delayed or inadequate communication

Mis-selling

Outcome:

Partially Upheld

LEGALLY BINDING DECISION OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN

This complaint arises from two pension-backed mortgage loan agreements, entered into by

the Complainants with the Provider in or around February/March 2005 (‘the Loans’).

In or around the same time, the first Complainant purchased a Personal Retirement Savings

Account (PRSA) from a third-party provider, which is a separate legal entity and a wholly

independent subsidiary of the Provider.

The Complainants’ Case

The Complainants state that in 2005, they were mis-sold the Loans, in that the Provider

furnished them with misleading information about the possibility of using a pension

product, as security to discharge the Loans. The Complainants say that they met with an

agent of the Provider, for the purpose of obtaining a pension, and that this meeting was

attended by an agent of the third-party pension provider.

They state that:

“to facilitate this type of pension, all our existing mortgages and loans, which were

principal and interest repayments, were converted to interest only and instead of

paying the principal sum we paid an amount of €1,222 (as dictated by the 2 new

mortgages totalling €302,000 and the pension fund having to be twice the value of

the loan) into the pension fund.

- 2 -

/Cont’d…

The pension was also to be held as SECURITY (something given or pledged to

guarantee payment of a loan) by the bank. In our case it was pledged as we were

told we had to use the pension as SECURITY (see attached and below). The idea being

at retirement OR EARLIER IF A CALL WAS MADE FOR EARLY REPAYMENT (see

attached and below), there would be sufficient funds to pay the outstanding principal

sum, a lump-sum and a pension.”

The Complainants submit that “the pension mortgage is geared towards high earners which

we never were”. They further state:

“It was always our understanding, and was explained to us, that the pension was held

as security and the proceeds of same would be offset against the outstanding

principle (sic) balance.”

The Complainants submit that, during this sales meeting, they asked what would happen if

they could not make payments on their loans. The Complainants say they were shown the

relevant provision of their contract and that they “understood from this statement that the

pension fund could be accessed at any time”. The Complainants submit that they saw the

mortgage loan and the pension policy as one product, and not as separate products.

The Complainants say that they approached the Provider in or around November 2012, in

relation to their monthly payments on the Loans, and a moratorium was approved for a

period of time. Following the moratorium, the Complainants contacted the Provider to

request the option of offsetting the pension fund, against the loan debt, and then selling the

property to cover the outstanding debt. The Complainants state that, at that point, the

Provider informed them that the loans and the pension were not interlinked, and that the

Complainants should “park the pension” sell the property and carry the debt”.

The Complainants state that they received an email dated 1 November 2012 from the

Provider, about a phone call they had made (though it appears from the evidence that this

message was in fact from the separate pension provider). The email stated:

“The client phoned today… when she asked what type of loan this was and I advise

her that it was an individual PRSA – a pension, she became very unhappy… She said

that she thought it was a product that could be used to clear off her mortgage. I

reiterated what the product was…”

The Complainants contend that since 1 November 2012, they have tried to engage with the

Provider, but they have had “little or no success after multiple attempts”. They say that they

were unable to find an agent of the Provider who could deal with their endowment/pension

backed mortgage, as there was no Department that dealt with both the mortgage loan and

the pension.

The Complainants further submit:

“In July 2015 we were forced to submit a complaint to the bank via their complaint

process in order to try get them to engage with us. However [Provider] did not adhere