Property Investment Decision Reference 2022-0011

Case OutcomeRejected
Subject MatterProperty Investment
Date07 January 2022
Conducts Complained OfComplaint handling (Consumer Protection Code)
Finantial SectorInvestment
Decision Ref:
Product / Service:
Property Investment
Conduct(s) complained of:
Complaint handling (Consumer Protection Code)
The complaint concerns the Provider’s administration of the Complainant’s mortgage
The Complainant’s Case
The Complainant explains that she held three residential investment property loans with
the Provider, against which this complaint is made, jointly with her husband. Sadly, the
Complainant’s husband died in 2016. While the Complainant was a joint borrower with
her deceased husband, the Complainant explains that her husband was the sole point of
contact with the Provider and that she had no day-to-day involvement in the banking
relationship. Following the death of her husband, the Complainant says she discovered
there were residual, unsecured investment property borrowings of approximately
€220,000.00 with the Provider, which were in arrears. The Provider subsequently sold
these loans to a third party purchaser (“the TPP”) in August 2017.
In September 2017, the Complainant says, on the advice of her solicitor, she engaged the
services of a regulated debt management firm (“the Debt Management Firm”) to advise
her in relation to her former Provider borrowings because at that stage, the TPP was
demanding repayment of the outstanding balance.
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The Complainant advises that the review undertaken by the Debt Management Firm
identified a number of issues in relation to two of her loans, as follows.
Loan account 101 The Complainant says this loan was for an amount of €352,000.00 and
was entered in March 2006 to buy out a property located in Dublin (“Property 1”), which
was owned on a 50/50 basis by the Complainant’s husband and his brother. The
Complainant says the review identified that, on the buy-out, the property was registered in
the sole name of the Complainant’s husband, but despite this, the Complainant says she
was joined in the loan as a joint and several borrower.
The Complainant says Property 1 was charged as security for this loan and this was the
only security held for the loan. The Complainant says she was not given the opportunity by
the Provider to obtain independent legal or financial advice before signing the loan offer,
which the Complainant submits would have identified that she was gaining no benefit
from the transaction but was taking on joint and several liability for the loan.
The Complainant says Property 1 was sold in October 2015, as a result of pressure from
the Provider, with the sale proceeds totalling €427,955.00. At that stage, the Complainant
says the balance outstanding on the loan was €369,329.90. However, for whatever reason,
the Complainant says, only €151,694.98 of the sales proceeds were applied to the loan,
leaving an unsecured, residual balance of €217,634.92 which, with interest, increased to
€222,185.13 by the stage the loan was sold to the TPP.
The remaining sales proceeds of €276,260.02, the Complainant says, were applied to repay
loan account 201 in full. However, the Complainant says this loan, unlike loan account 101,
was to be secured by a life policy which provided life cover in the amount of €261,500.00
with an expiry date of 18 May 2032.
Loan account 201 The Complainant says this loan was taken out in 2006 and was topped
up in March 2007 in the amount of €100,000.00. The Complainant says this loan was to be
secured by life cover on the borrowers’ joint lives in the amount of €261,500.00. The
Complainant says the loan agreement stated, as follows:
“Additional Mortgage Protection Insurance Required €100.000.00 giving total
borrowings of
€261,491.87 for 24
years and 8 months/296
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Life or lives to be insured [Complainant’s husband
and the Complainant]
As part of the investigation undertaken by the Debt Management Firm, the Complainant
says it was discovered that although the required life cover was taken out by her late
husband, the Provider did not take an assignment over the policy and the policy was
cancelled by her husband in January 2015. Again, from the investigations undertaken, the
Complainant says it would appear the motivation to cancel this policy was the result of
relentless pressure on her husband from the Provider to make repayments. The
Complainant says she was completely unaware of this.
The Complainant submits that had the Provider taken an assignment over this policy, it
would not have been possible for her husband to cancel it without the Provider’s
knowledge and consent. In response to this, the Complainant says the Provider has stated
that it was not the Provider’s policy to take an assignment of a life policy where the loan
advanced was below €320,000.00.
In resolution of this complaint, the Complainant states, as follows:
“I am seeking the following:
1. A payment of €222,185.13 being the balance outstanding on Loan No. [101] at
the date of the sale of the loan to [the TPP].
2. Compensation of €30,000 for the workload and stress on me arising from these
issues following the death of my late husband.
3. Reimbursement of legal and financial advisory fees totalling €18,450, inclusive
of VAT.”
The Provider’s Case
In its Complaint Response, the Provider has set out a 33 page timeline of events covering
the period 17 May 2006 to 28 August 2017.
In respect of loan account 101, the Provider says this loan agreement is dated 27 March
2006 and was in the amount of €352,000.00. The Provider says the purpose of the loan
was to re-mortgage Property 1 (to buy out a third-party share in the property), and the
security held for this loan was a first legal mortgage and certificate of title over Property 1.
The Provider says this loan was transferred to the TPP in August 2017.

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