Bank of Ireland increase differential on tracker rates

Bank of Ireland increase differential on tracker rates

10:32 AM, 28th February 2013, About 12 years ago 1862

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The story of the Bank of Ireland decision to increase to the differential (interest rate margin) on  tracker mortgages started on this forum when a professional landlord contacted Property118 within minutes of a letter from Bank of Ireland landing on his door mat. What ensued was outrage from landlords and affected residential mortgage borrowers. The story was quickly picked up by the National Media as it wasn’t just the 13,500 affected borrowers who were worried.

Will this set a precedent for other mortgage lenders to follow?

Property118 reacted by using funds donated to The GOOD Landlords Campaign to underwrite the cost of a barristers opinion on the legality of the Bank of Ireland’s actions. The remainder of this thread,one of the most read and most commented threads of all time on Property118, continues to tell the story as it unfolds.

If you want to skip the story and cut to the chase simply CLICK HERE

Of the 13,500 affected borrowers, 1,200 have had the decision reversed by Bank of Ireland. With additional support and pressure we believe all affected borrowers can and will see justice done.

___________________________________________

Lee, a professional Landlord asks, “help! I have just received a letter from the Bank of Ireland stating they want to increase the differential on my tracker rates.

I have 12 mortgages with the Bank of Ireland previously Bristol and West. I have been on a base rate tracker of 1.75% above base, but now Bank of Ireland are using some fine print claiming they have to recapitalise and saying the ‘new differential will be 4.49%.

How can I fight back?”

The original policy wording seems to be:

6 INTEREST

Charging interest at a tracker rate

(j) Unless we change the differential (if any) under condition 6 (n), we will not change the tracker rate unless the base rate changes.

(m) in condition 6 (n):
– a “positive differential” means a percentage which we add to the base rate to arrive at the tracker rate; and a “negative differential” means a percentage which we subtract from the base rate to arrive at the tracker rate.

(n) We may reduce a positive differential or increase a negative differential at our discretion by giving you not less than seven days written notice. This means that we can change the differential in a way that is favourable to you.

The above seems to indicate that they can reduce the rate in my favour, but not give them the right to increase it. Am I correct?


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19:52 PM, 14th March 2013, About 12 years ago

Hi Mark

Thanks for your speedy reply. I have completed the Class Action Expression of Interest Form.

Should i also be complaining to ombudsman and BoI ? As some have done.

Mark Alexander - Founder of Property118

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20:05 PM, 14th March 2013, About 12 years ago

@Mike - YES, and YES. Complain to both

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20:48 PM, 14th March 2013, About 12 years ago

Hi Everyone,
I requested a copy of my mortgage offer and associated Terms and Conditions for BOI, I took a BTL tracker mortgage out with B&W in sept 2003. I received the documents today and the Terms and Conditions booklet which I can't ever remember them sending me in the first place is for a residential mortgage not a BTL. I am not at all skilled in the finance industry but these seem to be two totally separate products to me (BTL and Residential) so how can one set of T&Cs apply to the other product. Any help, comments or suggestions would be more than welcome. I look forward to hearing from you. Regards Colin

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21:01 PM, 14th March 2013, About 12 years ago

Colin - I agree its very odd. In fact this is a very good point to raise when you write to the FSA asking for their involvement. BTL mortgages were not regulated by the FSA but these very residential conditions may cause them to take interest. If enough of us make the point to the FSA , the better. Of course they may still agree to become involved in any event , but it cant hurt to mention it.

Terry Donohue

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21:05 PM, 14th March 2013, About 12 years ago

Hi Colin,
I think BOI would of course send you the booklet and lull you into believing you received it originally. Our mortgage offer included a 3 page mortgage conditions letter typed and signed. You should ask them for this 3 page letter as it contains a list of things to read which they originally sent you. In 2003, our letter did NOT include any RESIDENTIAL MORTGAGE CONDITIONS 2001.
Terry

Fed Up Landlord

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21:33 PM, 14th March 2013, About 12 years ago

Colin, I had a 2003 Mortgage Offer which referred to section 4(10) of the Mortgage Conditions 2002 which allowed the increase in the differential. I didn't have a copy of the Mortgage Conditions 2002 so I asked BOI for a copy of the relevant paperwork. They sent me a copy of my mortgage offer and a copy of the residential Mortgage Conditions 2001 which they said in an accompanying letter "was in use at that time". So if the Mortgage Offer was to be read in conjunction with the mortgage conditions then they referred to the wrong mortgage conditions which coincidentally did not have a section 4(10). So if they did send out Mortgage Conditions they have sent out the wrong ones. This may well fall foul of Unfair Contract Law. Anybody who did not have a copy of the Mortgage Conditions might well ask for a copy of "the relevant paperwork" to see what they send. The Mortgage Offer and the Mortgage Conditions might not match up.

Fed Up Landlord

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22:35 PM, 14th March 2013, About 12 years ago

New story on this at http://www.moneysavingexpert.com/news/mortgages/2013/03/fight-bank-of-irelands-unfair-mortgage-hike

Prominent consumer lawyer states that the increases may well fall foul of unfair contract law, the banking code " Treating Customers Fairly" and new FSA guidelines on "mortgage prisoners" with high LTVs.

Mark Alexander - Founder of Property118

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7:12 AM, 15th March 2013, About 12 years ago

@Gary, Mike Daily very elequently comments one of the points raised early into this forum and which both Justin Selig and our barristers are considering amongst a very long list of other issues pointing to the B&W and BoI terms constituting an unfair contract. It's nice to know that another prominent lawyer agrees and thank you for sharing this link. Keep them coming. What we really want now is the FSA's response letter. Let's hope it is published soon.

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10:00 AM, 15th March 2013, About 12 years ago

@Mark
Like you I await the expected response letter from the FSA, and from BOI on my initial complaint.
I would also like to point out that there is a lot of talk about the BOI useing exceptional circumstances clause to do this, however if your morgtage is covered by the 2001 residential T&Cs then clause 6(o) "We may reduce a positive differential or increase a negative differential at our discretion." looks like a trump all clause, which changes a fixed rate tracker to a variable rate tracker regardless of what it is described as elsewhere and other issues.
Apart from not being specifically aware of of this when we signed up, my question is simply is that a fair contractual clause?

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10:04 AM, 15th March 2013, About 12 years ago

This was my reply from the FSA, hopefully Andrew will get a more productive response....

Thank you for your email dated 1st March 2013, and thank you for explaining your concern over the approach taken by the Bank of Ireland with regards to your mortgage contract with them. I am sorry to hear of the problems you are experiencing with this firm.

Unfortunately, we cannot intervene in or investigate complaints against the firms we regulate on behalf of the public; this is a role that falls under a separate and independent body, called the Financial Ombudsman Service (the Ombudsman).

As you wish to make a complaint about this regulated firm, you should in the first instance complain to the firm directly to give them an opportunity to investigate your complaint and, if appropriate, to put things right. Should you not get a satisfactory response or outcome from the firm then you can ask the Ombudsman to consider your complaint, particularly if the firm does not give you a satisfactory response within eight weeks. The firm should provide you with the Ombudsman's contact details but I have provided a link to their website here for your information: http://www.financial-ombudsman.org.uk/consumer/complaints.htm

I have also provided a link here to a booklet that is available on-line and in hard copy from the Money Advice Service that may help you when considering and putting together your complaint case with the firm: https://www.moneyadviceservice.org.uk/files/final-making-a-complaint---june-2011.pdf

I should also explain that the FSA is the UK's financial watchdog set up by the government to regulate financial services. We protect consumers by setting standards that FSA-regulated firms must meet and we seek to take action if they don't. Although we cannot deal with your complaint on your behalf, which is the role of the Ombudsman, we still take seriously individual complaints against the firms we regulate. Information that we receive from various sources, including information that the Ombudsman may share with the FSA, is used to develop a picture of where firms may be failing to meet our standards and this helps us to determine what appropriate action to take against any regulated firms.

I hope this helps to clarify our role regarding your complaint with the firm.

Yours sincerely

Michael Bailey
Customer Contact Centre
Financial Services Authority

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