Repayment Mortgage Decision Reference 2019-0259

• Case Outcome: Partially upheld
• Reference: 2019-0259
• Date: 15 August 2019
• Year: 2019
• Subject Matter: Repayment Mortgage
• Conducts Complained Of: Settlement amount (mortgage),Delayed or inadequate communication, Dissatisfaction with customer service , Failure to provide correct information, Fees & charges applied (mortgage)
• Finantial Sector: Banking

Decision Ref:

2019-0259

Sector:

Banking

Product / Service:

Repayment Mortgage

Conduct(s) complained of:

Settlement amount (mortgage)

Delayed or inadequate communication

Dissatisfaction with customer service

Failure to provide correct information

Fees & charges applied (mortgage)

Outcome:

Partially upheld

LEGALLY BINDING DECISION

OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN

Background

The Complainants hold a mortgage loan account with the Provider in respect of their primary

residence. The complaint relates to the Provider’s ongoing assessment of the mortgage

under its Mortgage Arrears Resolution Process (MARP), between 2010 and 2016. The

complaint is that the Provider failed to complete an assessment of the Complainants’

position under MARP and to offer an Alternative Repayment Arrangement (ARA). They

further complain that the Provider failed to respond to purchase offers presented to it with

regard to the sale of the mortgaged property.

The Complainants seek the following resolution from the Provider:

1. that the mortgage loan account be assessed under the Provider’s MARP;

2. that a designated official be appointed to the case; and

3. that a response to the proposals and offers made to the Provider regarding the sale

of the Complainants’ home, be provided.

The Provider has generally refuted the complaint but acknowledges some administration

failures, including a 3 week delay in transferring the Complainants’ complaint letter to its

complaints handling centre. In recognition of any inconvenience and delay, the Provider

offered a goodwill gesture of €280 to the Complainants.

- 2 -

/Cont’d…

The Complainants’ Case

The Complainants state that the Provider failed to complete an assessment of the private

dwelling house mortgage under its MARP policy or to offer them an ARA. The Complainants

argue that offers were presented to the Provider for consideration, when the house was put

on the market and that various proposals and Standard Financial Statements (SFSs) were

submitted for consideration. The Complainants state that no written response was received

from the Provider to these offers.

The Complainants request that the mortgage be assessed by the Provider and that the case

not be passed from one relationship manager to another but for an individual official to take

responsibility for it. The Complainants seek a written response to their proposals and

subsequent offers on the property. They argue that if these proposals had been accepted or

an indicative sale price agreed, the Provider could have mitigated the loss and assisted their

financial situation at any point between 2010 and 2016.

In an email dated 14 March 2016 from the Complainant to his financial adviser, the first

Complainant set out various proposals he made to the Provider in 2010 and 2012. He

indicated that he proposed that the property would be split into an upstairs apartment and

a downstairs apartment but that this proposal was rejected. He also suggested that a small

part of the property would be turned into apartment and rented, or that he would vacate

the property completely in order to rent it.

A financial adviser acting on behalf of the Complainants argues that it was the understanding

of the Complainants that the loan was an interest only mortgage until 2028. They argue that

the loan was on a tracker rate of interest and that it was originally classified as an

endowment mortgage but that the Provider never actioned the endowment policy. The

Complainants argue that €100,000 was paid towards the mortgage in 2009 from the sale of

another property which, according to the Complainants, means that the interest only

repayments have been fully paid with no arrears. The Complainants note that they have

been advised that the mortgage is part of a loan sale by the Provider, even though the

contractual payments are up-to-date. In a further submission, the Complainants’ financial

adviser states his understanding that the terms of the loan were varied through a broker of

the original lender, in 2008.

The Complainants argue that the letter of offer of 27 August 2003 demonstrates that the

first 12 months of the mortgage were agreed as interest-only repayments at €1,376 per

month at a discounted interest rate of 2.5%, followed by 288 months of interest only of

€1,882.67 per month based on the then prevailing standard variable rate. They argue that

this arrangement is confirmed by section 14 of the Provider’s terms and conditions of the

original offer, which is an illustrative amortisation table and which, they argue, clearly shows

that the loan balance at the end of the 25 years was to be the principal sum of €640,000,

unless either of the secured assets was sold in the meantime.

The Complainants argue that the letter of offer of 27 August 2003, accepted by the

Complainants on 29 September 2003, shows that the Complainants had and still have an

interest only mortgage for the full term. They argue that with capital and interest