Bank of Ireland increase differential on tracker rates

Reply to the comment left by "Darrell G" at "03/11/2014 - 10:50":

Hi Darrell

Justin is active, I was cc'd into an email sent by him to Gary this weekend.

Given that I was only cc'd I don't feel at liberty to share the detail but Gary can of course.
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Darrell my brief email with Justin consisted of whether or not I let the adjudicator know if I had other BTL Mortgages and thus not be a "consumer". His advice is that I should albeit I have no confidence whatsoever in the FOS and neither should anyone else. The comments above about requesting the FOS balance sheet are spot on. My complaint letter asked them to evidence the specific criteria which satisfied the differential increase clause. BOI said it was "commercially sensitive". If they will not disclose it how do we know the clause is satisfied? They could say anything. I shall be pointing this out to the adjudicator when I reply.

I just received my rejection letter from FOS !

My proposed response is below, anyone any comments before I send it ?
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Dear Mr Rogers,

I have today received your decision about my bank of Ireland complaint.

I would like to reply that I totally reject your decision and wish to further appeal.

I am disappointed in the FOS who have taken the side of a bank who has broken my trust in the consumer contract into which I entered in good faith.

Is this e-mail sufficient for a reply which you requested by 19 November ?

If you need a letter I will arrange to post one.

I am certainly NOT a proffessional landlord (as you have decided) but a simple consumer who you should be protecting.
I can not readily dispose of the property or re-mortgage and so I decided to 'let' the property in order to pay the mortgage.
Eventually I was hoping to supplement, by a small ammount, my pension which was taken early because of ill-health (and therefore reduced) as I previously indicated to you.
Because of the BoI actions I am now having to supplement the rent from my reduced pension in order to pay the mortgage.

The original mortgage was taken with Bristol and West and I became a Bank of Ireland customer by default when they took over the Bristol and West mortgage accounts.
When I took the original mortgage the Bristol and West bublicity clearly stated that it was BOE base rate plus 1.25 % for the 'term' of the mortgage, as a simple consumer I believed that this was a consumer contract which was safe from changes.

I consider that the Bank of Ireland has 'trapped' me into a mortgage for which they can choose to change the rates as they see fit !

Sorry to hear this Tricia. Can you possible tell us what the FOS wrote to you. Did they say just that it was because you were a professional landlord or was there more? Thanks

The letter was 3 pages, they also said they looked at the BoI finances re the regulators requiremenmts , that they had a valid reason to increase the differential. Also that the increase was not profit making but to'maintain a ''prudent level of profitability and reserves'.
this tells me that the customers are bailing out the bank 1

"Ombudsman must reconsider complaint over mortgage rate hike"

Not directly related to this case but VERY interesting nonetheless!

See >>> http://www.irishtimes.com/business/sectors/financial-services/ombudsman-must-reconsider-complaint-over-mortgage-rate-hike-1.1956650
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Reply to the comment left by "Mark Alexander" at "10/11/2014 - 18:41":

The letter was 3 pages, they also said they looked at the BoI finances re the regulators requiremenmts , that they had a valid reason to increase the differential. Also that the increase was not profit making but to'maintain a ''prudent level of profitability and reserves'.
this tells me that the customers are bailing out the bank 1

I just had another thought for my FOS response, Bristol and West allowed me to take the buy-to-let mortgage based on my personal income at the time, therefore not as a proffessional landlord, they (BofI) are now trying to change thye criteria after the contract !

Tricia, your last paragraph is a very good point. In this world where things are supposed to be open and transparent, why are banks allowed to be secretive. Not that their secretiveness is really relevant to our case, no matter what they say they shouldn't have done what they did for other reasons.

Hi,

I got same decline, on the basis of BoI disclosing ability to change and finances in small print. This was not a BTL mortgage.

Here's my response;
I dissagree with your decision and interpretation of this matter.

I would also like to note that I am sceptical of the appeals process at FOS given the conversation we had where it was indicated that any appeal was unlikely to be given further consideration as ‘we’ have already decided.

1. How the Complaint arose

You state that I took out the mortgage with BoI and then Bristol and West. Actually it was the other way around.

2. Summary and conclusions

You state that the documentation the business gave me at the time of the mortgage offer made me aware that the SVR could be increased.

The fact is that the loan was written on the basis that the interest rate would stay fixed to the Bank of England base rate, with a very vague and subjective statement regarding changing it. This was hidden in the small print. The relevant statement was ambiguous and subjective. Any other commentary you make on disclosure regarding variable rates, all were interpreted as relevant only because of the fact the mortgage was linked to BoE not because they were able to vary the linkage to the BoE base rate. How is a consumer supposed to take out a mortgage and also assess the likelihood that a bank will change the interest rate based upon non defined confidential variables about their business.

As you will be aware, when a contract is written, under contract law Contra proferentem "interpretation against the draftsman" applies. The reasoning behind this rule is to encourage the drafter of a contract to be as clear and explicit as possible and to take into account as many foreseeable situations as it can. As this statement is vague, how it is judged to be upheld should be in favour of the borrower and not the bank.

You might find this article of relevance in this regard;

http://www.irishtimes.com/business/sectors/financial-services/ombudsman-must-reconsider-complaint-over-mortgage-rate-hike-1.1956650

You state that the ‘bank needed to hold more capital reserves’.

I challenge the validity of this statement on several grounds;

Who researched bank balance sheet and what professional qualifications do they have to make this decision?

Was the information provided by BoI audited by an external firm?

Did BoI breach a specific ratio?

How far below the ratio were they?

How are you able to allocate any profitability issue to my mortgage in particular, as the mortgage was repaid in full and without loss?

I understand that residential mortgages carry a risk weighting of 35%, and thus taking in to account my mortgage was repaid in full and the contract rate of interest was 2.49% above BoE, the Return on Capital on my mortgage will have been 8.54%. This is certainly not a ‘loss’ in a low interest rate environment and does not factor in the higher rates of interest charged before interest rates were lowered.

3. Reference your comments on the Unfair Consumer Contract Regulations – this clearly indicates that it is not possible to change a contract without asking the other side first and their agreement. I certainly did not agree to the rate increase.

I do not limit my arguments to the above and await your prompt response. FOS has taken over 12 months to review this case and given me 2 weeks to respond.

Yours sincerely,

Nice response. I think I'll hit them too with my evidence.