Ulster Bank Ireland DAC v Financial Services & Pensions Ombudsman

JudgeMs Justice Bolger
Judgment Date22 June 2023
Neutral Citation[2023] IEHC 350
CourtHigh Court
Docket Number[Record No. 2021 137/173/174 MCA]
Ulster Bank Ireland DAC
Financial Services and Pensions Ombudsman


U.H.K and F.K., P.C. and D.B., K.C.
Notice Parties

[2023] IEHC 350

[Record No. 2021 137/173/174 MCA]


Counsel for the appellant: Eoin McCullough SC, Marcus Dowling SC, John Freeman BL, Stephen B. Byrne BL.

Counsel for the respondent: Eileen Barrington SC, Francis Kieran BL.

JUDGMENT of Ms Justice Bolger delivered on the 22 nd day of June 2023


. This is an appeal by Ulster Bank ( “the Bank”) of three related decisions A, B and C of the Financial Services and Pensions Ombudsman ( “the FSPO”) under s. 64 of the Financial Services and Pension Ombudsman Act 2017 ( “the 2017 Act”). The Bank seeks to set aside each of the decisions in whole or in part and to remit the complaints to the FSPO with directions. For the reasons set out below I am refusing this application.


. Each appeal arises out of complaints successfully made by the notice parties to the FSPO, that they were entitled to be charged a tracker interest rate on their mortgage ie a rate tracked to the ECB rate.

The C Decision

. The FSPO's final decision in C issued prior to the expiry of the period allowed for submissions and the Bank was, therefore, wrongly denied their right to comment on the preliminary decision. Both parties agree that this decision should be set aside and remitted to the FSPO but the Bank argued that this Court should remit it with directions on the FSPO's contention from his A and B decisions, that the notice parties obtained an enduring entitlement to a tracker rate of interest. The parties have agreed to leave over the precise order to be made in C pending this Court's judgment in A and B.

The A Decision

. The notice parties in A took out a mortgage with the Bank in 2006 on a tracker rate stated to be “fixed for the life of the Home Loan term”. In 2007, they transferred the maximum permissible amount of their mortgage to a staff fixed rate of 3%. In 2010 they sought to revert back to the tracker rate but the Bank refused because it had, by then, stopped offering a tracker rate to new customers. The notice parties complained that the Bank:-

The FSPO did not uphold the complaint at (iii) and that decision was not appealed.

  • (i) Failed to advise them of the consequences applying the staff fixed rate to their mortgage loan account in June 2007;

  • (ii) Failed to revert their mortgage to a tracker interest rate when requested in December 2010;

  • (iii) Inappropriately changed their terms and conditions in 2017 without notice.


. The Bank relied on the Staff Home Loan Scheme Rules, which it had made available to the notice parties via its intranet and which described the staff interest rate as “3% per annum fixed for the term of the loan”. The Bank claimed that this denied the notice parties any right to revert back to the tracker rate that was, by the time the notice parties applied to revert, no longer offered by the Bank to new customers.


. The Bank requested an oral hearing which the FSPO refused on the basis there was no conflict of facts and the submissions and evidence were sufficient to enable him to reach a decision, relying on authorities of this Court that he said afforded him a broad jurisdiction whether or not to hold an oral hearing.


. In his decision, the FSPO noted that when the notice parties transferred to the preferential staff rate, no new agreement was drawn up to amend the terms and conditions of the original offer of advance. There was no documentation incorporating the Staff House Loan Scheme Rules into the notice parties' then existing terms and conditions of their mortgage loan, even though the Bank may have intended those rules to amend or vary those terms and conditions. The issue was whether the Bank's intended application of the rules was clear to the complainants such that those rules ended their entitlement to a tracker rate or whether the reference to the life of the home loan, stated on the original offer, was still relevant. He held that the terms and conditions of the mortgage loan were not amended by the notice parties' move to the staff interest rate in May 2007 and therefore the condition providing for the tracker rate “for the life of the Home Loan term” remained in being. He found that the Consumer Protection Code 2006 imposed a duty on the Bank “to ensure that all documents or instructions that change or remained contractual entitlements are clear as to the changes or amendments that are being made”. He said he was:-

“at a loss to understand how the Provider could form the view that the Complainants would or should have known that the consequences of applying the staff fixed interest rate of 3% was that the Complainants were giving up their contractual entitlement to the tracker interest rate of ECB + 1.15% as per their original contractual terms, in circumstances where, this was not documented at all. While it may be the case that the Provider intended or would have liked that the application of the staff fixed rate of 3% to a portion of the mortgage loan, meant that the Complainants gave up the contractual entitlement to the tracker interest rate of ECB + 1.15% on that portion of the loan going forward, that is not documented anywhere, particularly in the Staff House Loan Scheme Rules, and there is no evidence that the Complainants agreed to this amendment to their original contractual terms.”

The FSPO noted that the staff preferential rate ceases to apply where the borrower leaves the Bank's employment and, unlike the tracker rate, the Rules do not describe the staff preferential rate as a lifetime product. He found that the Rules did not override the notice parties' entitlement to the tracker interest rate and the Bank should have made that clear if they intended the Rules to do so. The Bank was directed to apply the tracker interest rate to the notice parties' mortgage from December 2010, repay any interest overpaid and pay compensation of €3,500.

The B decision

. The notice parties in B drew down a mortgage in 2004 on the Bank's then Home Loan Rate. In 2006 they switched to the Bank's tracker rate which was stated to be “fixed for the life of the Home Loan term”. In 2007, interest rates began to rise, and the notice parties elected to fix their interest rate for a specified period of time. They signed a Fixed Rate Authority ( “FRA”) which stated that on the expiry of the fixed rate, the Bank might offer “alternative available products” but if no such offer was made or if such an offer was made but not accepted, the Bank's Home Loan Rate would apply. The fixed rate period came to an end in 2010 and the notice parties sought to revert to their previous tracker rate but the Bank refused as it had stopped offering that rate to new customers since 2008. The FSPO did not accept the notice parties' argument that the Home Loan Interest Rate equalled a tracker interest rate or was to be construed as being related to it but he did find that the notice parties had a contractual entitlement to the tracker rate because signing the form to move to the tracker rate with a margin stated to be “fixed for the life of the Home Loan” had altered the terms and conditions of their original mortgage loan. The form did not say the rate was fixed provided the notice parties did not choose to move a different rate later, or for so long as they chose to avail of a tracker rate. If the Bank had intended that, the FSPO said it should have caveated the form with either or both of those conditions. The FSPO found that the terms or conditions of the notice parties' mortgage loan were therefore amended to include a contractual commitment to the tracker rate. He said he was at a loss to understand how the Bank could form a view that the notice parties would or should have known that the consequences of applying for the fixed rate was that they were giving up their entitlement to the tracker rate when this was not documented. It was not that the notice parties had a contractual right to revert to the tracker interest rate at the end of the fixed rate period in 2010 but, rather, that where the Bank was setting out interest rate options available to the notice parties, that they should have included the tracker rate among the available options.


. The Bank had sought an oral hearing by the FSPO which was rejected along the same lines as in the A decision.

The Bank's grounds of appeal

. The Bank asserted over 40 separate errors of law in its Grounds of Appeal, which it grouped under a number of headings in its written and oral submissions.

A right to an oral hearing

. There was a conflict on the facts which required cross-examination. Findings of fact were made about the terms of their agreement with the notice parties which meant the case fell within the ambit of the dicta of Finnegan J. in J&E Davy v. FSO [2010] IESC 30, [2010] 3 I.R. 324, such that a material dispute of correction of fact could only be resolved by an oral hearing.

The standard of review

. The Bank cited the decision of Finnegan P. in Ulster Bank Investment Fund v. FSPO [2006] IEHC 323, as to the standard of review on such an application, i.e. that the decision was vitiated by a serious and significant error or a series of such errors. The Bank also emphasised the dicta of Murray J. in Stanberry Investments Ltd v. Commissioner of Valuation [2020] IECA 33, at para. 49, where he confirmed that administrative tribunals obtain no deference on pure issues of law but that in areas touching on their expertise, the court should be slow to interfere with its reasoning. There can be no deference to decisions which have been reached on foot of errors of law or unsustainable findings of fact; Simons J. in Molyneaux v. FSPO [2021] IEHC 668 where the court noted that, even insofar as it could be said the error of contractual...

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