Tracker Mortgage Decision Reference 2022-0114

Case OutcomeRejected
Subject MatterTracker Mortgage
Reference2022-0114
Date30 March 2022
Finantial SectorBanking
Conducts Complained OfFailure 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.

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