Tracker Mortgage Decision Reference 2022-0305

• Case Outcome: Rejected
• Reference: 2022-0305
• Date: 31 August 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:

2022-0305

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

Background

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

Provider. The mortgage loan which is the subject of this complaint is secured on the

Complainants’ principal private residence.

The loan amount was €355,000.00 and the term of the loan was 25 years. The Letter of

Offer dated 02 November 2005 provided that the interest rate applicable to the loan was a

fixed interest rate of 3.45% for the first 24 months of the loan.

The Complainants’ Case

The Complainants submit that they drew down their mortgage loan with the Provider in

December 2005 on a two-year fixed interest rate, which would roll to the “Lenders

Prevailing variable rate on expiry” of the fixed rate period.

The Complainants submit that they received a notification from the Provider in November

2007 stating that the fixed interest rate was expiring, and that they were being moved to a

standard variable interest rate. The Complainants maintain that they “should have been

offered a Tracker rate” instead of the standard variable interest rate.

- 2 -

/Cont’d…

The Complainants state that they requested a tracker interest rate during a telephone call

with the Provider on 16 November 2007 but were “refused”. The Complainants submit

that because they were not offered a tracker interest rate, they enquired about various

fixed rate options and “agreed to go onto the best rate offered which was the 1 year fixed”.

The Complainants contend that the note of the telephone call on 16 November 2007

submitted into evidence by the Provider is “inadequate”.

The Complainants submit that the “Lenders prevailing variable rate is not defined” in their

mortgage loan documentation and it does not reference the standard variable rate. The

Complainants submit that, according to Central Bank of Ireland statistics, “the Prevailing

Variable rate with Irish banks during 2006-2008 was the Tracker rate” and therefore a

tracker interest rate should have been applied to their mortgage loan account. The

Complainants outline that they have not seen any legal documentation to support the

Provider’s assertion that the prevailing variable rate was in fact the standard variable rate.

The Complainants also maintain that “[they] should [have] had a Tracker when [their] Fixed

Rate period ended” in December 2007 because a flyer communication that issued from the

Provider to brokers in November 2006, provided “that all fixed rates will roll onto Tracker

rates”. The Complainants assert that the flyer “did not apply to new business only” and

instead “applied to existing business as well as new business but was primarily directed

towards existing business.”

The Complainants submit that the Provider’s Mortgage Handbook “clearly states that Fixed

rate customers can choose between Fixed, Variable and Tracker [rates] at the end of the

Fixed Rate period.” The Complainants state that the 2007 Mortgage Handbook should be

treated the same as the flyer communication which provided a “specific guarantee” of a

tracker interest rate. The Complainants contend that the tracker switching product as

outlined in the Provider’s 2006 Financial Statement is the same product as outlined in the

flyer and that this further supports their position that the Provider should have offered

them a tracker interest rate.

Moreover, the Complainants assert that the Provider failed to act in accordance with the

Consumer Protection Code as the Provider is “a regulated entity” which “must ensure that

in all its dealings with customers are within the context of its authorisation.”

The Complainants are seeking the following:

(a) That a tracker interest rate be applied to their mortgage loan account,

(b) A refund of any interest overpaid from December 2007 to present; and

(c) Compensation due to the “financial loss” incurred by the Complainants.