Tracker Mortgage Decision Reference 2022-0114

• Case Outcome: Rejected
• Reference: 2022-0114
• Date: 30 March 2022
• Year: 2022
• Subject Matter: Tracker Mortgage
• Finantial Sector: Banking
• Conducts Complained Of: Failure to offer a tracker rate throughout the life of the mortgage

Decision Ref:

2022-0114

Sector:

Banking

Product / Service:

Tracker Mortgage

Conduct(s) complained of:

Failure to offer a tracker rate throughout the life of

the mortgage

Outcome:

Rejected

LEGALLY BINDING DECISION

OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN

This complaint relates to a mortgage loan account held by the Complainants with the

Provider. The mortgage loan was secured on the Complainants’ residential investment

property.

Mortgage loan account ending 005/1 consisted of the following three “portions”:

• The Letter of Offer dated 25 October 2000 provided for a loan in the total amount

€133,322.50 (£105,000 Irish punt) and the term of the loan was 15 years. The

Letter of Offer dated 25 October 2000 detailed that the loan was made up of the

following two portions:

o The first portion totalling £45,000 (Irish punt) to be drawn down on a 12-

month discounted variable interest rate.

o The second portion totalling £60,000 (Irish punt) to be drawn down on a 3-

year fixed interest rate of 7.03%.

• The Letter of Offer dated 02 July 2003 provided for a top-up loan in the amount of

€45,000 and the term of the loan was 12 years and five months. The Letter of Offer

dated 02 July 2003 detailed that the applicable interest rate was a fixed interest

rate of 3.19% for 12 months.

- 2 -

/Cont’d…

The Complainants’ mortgage loan account ending 005/1 was redeemed

on 27 October 2017.

The Complainants’ Case

The Complainants submit that they have never been offered a tracker interest rate by the

Provider in respect of any portion of their mortgage loan since December 2003, when the

Provider introduced tracker interest rates as part of its product offering. The Complainants

explain that they had a number of “fixed rate rollovers” on the three portions of their

mortgage loan however they were “never asked to contact the [Provider] in writing or

otherwise to discuss tracker rate options before [the Complainants] fixed the rate.”

The Complainants submit that they contacted the Provider on 12 July 2004 to discuss the

interest rates available for their mortgage loan account. The Complainants assert that

“Never during the conversation did [the Provider] discuss or mention the tracker rate

option.” The Complainants note that the 3-year fixed interest rate “was 0.99% higher than

the Tracker rate and 0.74% higher than the Standard variable rate” in July 2004. The

Complainants state that the Provider keeps “insisting that the only discussion was on Fixing

the rate on 12th July 2004”, however, they maintain that it is “inconceivable” that they

would not have discussed tracker interest rates and variable interest rates due to the large

difference between these rates.

The Complainants assert that the “fact that [they] regularly fixed the interest rates is

irrelevant as is the movement or expectations on ECB rates during the period”. The

Complainants detail that they would “have carefully weighed up the variable versus fixed

rate before sometimes settling on the latter” but the “key issue is that no tracker rate

option was offered to [the Complainants] reducing [their] alternatives”. The Complainants

state that the Provider “has confirmed that [they] were never given any detail of [their]

[tracker interest rate] entitlement in writing or in phone conversations.”

The Complainants further submit that the Provider issued them with a letter dated 11

October 2006 which encouraged them to “pre- book a fixed rate”. The Complainants state

that the wording in the letter dated 11 October 2006 was “a powerful inducement” to

“follow that strategy.” The Complainants submit that it “served [the Provider’s] purposes

to ensure that the mortgage account remained on their books during the fixed term period

and eliminated the transferring to another financial institution with better alternatives.”

The Complainants detail that they chose to apply fixed interest rates to the portions of

their mortgage loan on 6 November 2006 and 21 June 2007 on foot of the Provider’s

correspondence.