Tracker Mortgage Decision Reference 2023-0015

• Case Outcome: Rejected
• Subject Matter: Tracker Mortgage
• Reference: 2023-0015
• Date: 23 January 2023
• Finantial Sector: Banking
• Conducts Complained Of: Failure to offer appropriate compensation or redress CBI Examination

Decision Ref:

2023-0015

Sector:

Banking

Product / Service:

Tracker Mortgage

Conduct(s) complained of:

Failure to offer appropriate compensation or

redress CBI Examination

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 which was secured on the Complainants’ private dwelling house (“PDH”). The

loan amount was for €280,000.00 and the term of the loan was 30 years. The interest rate

applicable was a tracker interest rate of ECB + 1.05%.

The mortgage loan account was redeemed by the Complainants on 26 March 2010 when

the Complainants opted to avail of the services of an alternative provider.

The Complainants’ mortgage loan account was considered by the Provider as part of the

Central Bank of Ireland directed Tracker Mortgage Examination (the “Examination”). The

Provider identified that a failure had occurred on the mortgage loan account and as such

the mortgage loan account was deemed to be impacted under the Examination.

The Provider wrote to the Complainants on 11 January 2018 advising them of the error

that had occurred on their mortgage loan account. The Provider detailed “Why your

mortgage sub-account has been identified as impacted” as follows:

“…

- 2 -

/Cont’d…

Through the review conducted under the Tracker Mortgage Examination, the use of

ambiguous and confusing terminology has been identified as causing a lack of

transparency in some of the documentation you received.

When you drew down on a tracker rate you received a letter of offer that used the

term “Home Loan” to describe your mortgage. When you moved to a fixed rate the

document you received, when read in conjunction with your letter of offer, was

unclear as to the default interest rate that was to apply on the expiry of your fixed

rate term.

These documents referred to the default interest rate as follows: “…the [Provider’s]

Home Loan Rate shall apply in accordance with General Condition 2 of the Offer of

Advance originally accepted by you…” It was not clear that the [Provider’s] Home

Loan Rate was [the Provider’s] Standard Variable Rate (SVR) and not your original

“Home Loan” rate, which was a tracker rate.

…”

With respect to the effect of the failure on the mortgage loan account the Provider

outlined as follows:

“…

As the terminology was unclear regarding what rate would apply to your mortgage

when your fixed rate came to an end, we have identified that your mortgage sub-

account was impacted from 01/01/2009 up to 26/03/2010. Impact occurred when

your fixed rate came to an end and you were not offered your tracker rate. During

this impacted period you did not receive the benefit of a tracker rate and you will

now receive redress and compensation.

…”

The Provider made an offer of redress and compensation to the Complainants. The offer

of €7,494.34 made by the Provider to the Complainants comprised the following:

1. Total redress amount of €5,394.34 covering the following:

a. Redress amount of €4,990.05; and

b. Time Value of Money (“TVM”) of €404.29

2. Compensation of €1,500.00; and

3. Independent Professional Advice payment of €600.00