Tracker Mortgage Decision Reference 2022-0421

• Case Outcome: Rejected
• Reference: 2022-0421
• Date: 19 December 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,Failure to provide correct information

Decision Ref:

2022-0421

Sector:

Banking

Product / Service:

Tracker Mortgage

Conduct(s) complained of:

Failure to offer a tracker rate throughout the life of

the mortgage

Failure to provide correct information

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 that is the subject of this complaint was initially secured on

the Complainants’ buy-to-let property, which subsequently became the Complainants’

private dwelling house in November 2006.

The loan amount was €325,000.00 and the term of the loan was for 25 years. The Letter of

Offer dated 31 July 2006 outlined that the applicable “Loan Type” was “Interest only for 2

years reverting to annuity”. The interest rate applicable to the loan was a buy-to-let

variable interest rate of 4.20%.

The mortgage loan was redeemed on 30 June 2020.

The Complainants’ Case

The Complainants note that they applied for a mortgage loan with the Provider in or

around July 2006. The Complainants state that the Provider issued a Letter of Offer for a

mortgage loan on a one-year fixed interest rate in or around November 2006.

- 2 -

/Cont’d…

The Complainants submit that on the expiry of the one-year fixed interest rate period, they

were issued with correspondence from the Provider dated 6 November 2007 detailing a

number of interest rate options to include a tracker interest rate option. The Complainants

state that the correspondence did not detail the relevant ECB base rate and the

percentage margin.

The Complainants detail that the terminology used in the letter dated 6 November 2007

was ambiguous and therefore they were unable to make an informed decision as to which

interest rate to select. In this regard, the Complainants assert that they are of the opinion

that the letter was “unclear, confusing and does not explicitly state that [the Complainants]

can avail of a Tracker Interest Rate”. The Complainants further detail that the Provider had

described the rates as “a sample of rates… which would lead you to believe not all rates are

relevant to [them]”. The Complainants also indicate that the letter included a tear-off

section that could be completed to avail of a fixed interest rate but did not have a section

to complete to avail of a tracker interest rate.

The Complainants submit that they contacted the Provider to enquire about interest rates

in or around November 2007. The Complainants outline that they arranged a meeting with

a representative of the Provider during which they asked the representative of the

Provider “what the difference was between the tracker rate of 5.1% and the variable rate,

also at 5.1%”. The Complainants detail that the representative of the Provider informed

them that there was “no real difference” between a tracker interest rate and a variable

interest rate. The Complainants submit that they were “told” that if they did not complete

the rate options form then the mortgage loan account would default to a variable interest

rate. The Complainants outline that on foot of this meeting, the mortgage loan account

defaulted to a variable interest rate.

The Complainants submit that they subsequently opted to apply a five-year fixed interest

rate to their mortgage loan account in or around April 2011.

The Complainants detail that prior to the expiry of the five-year fixed interest rate period

on 19 February 2016, they were only offered fixed or variable interest rate options. The

Complainants submit that on 24 February 2016 they received further correspondence

from the Provider “advising of a commercially priced tracker rate of 4.72%”. The

Complainants submit that the tracker interest rate option was “broken down between

current ECB rate of 0.05% plus margin of 4.67%”. The Complainants state that they

contacted the Provider to discuss the conflicting nature of the two letters in or around

February 2016. The Complainants outline that a representative of the Provider “agreed

that there was an issue and said she would look into it for [the Complainants] and [they]

were to ignore the letters received in the meantime”.