Bank of Ireland increase differential on tracker rates

Re what Justin says about BOI taking legal advice. Shouldn't they have done that before they increased everybody's mortgages? If you go back through the posts it seems BOI have made a habit of making mistakes and having to go back and clear the mess up. Let's hope they have done the same on this occasion and have to back down- and pay all our costs.

On the subject of people not paying for the advice they have had via this forum and Justin's work on the matter- well it would be poetic justice if BOI only refunded the additional mortgage payments back to those who are part of the class action. But I can see that if they do back down then they will do it with everybody. But if it goes to a Court case then they may well only pay back those who take them to Court. I know it's human nature to try and save a few quid but, come on fellow property people £120 when you look at it is a drop in the ocean to what BOI is taking out of your bank every month. The more that contribute the cheaper it is. In the same vein Property 118 is a free resource for lots of people but some have chosen (like me ) to pay a small monthly subscription as I recognise the value of what I am getting. It's the same principle as the BOI class action.

And no, I don't work for Property 118 or Mark or Justin before anyone asks!

This alarming article has just appeared in Landlords Today >>> http://www.landlordtoday.co.uk/news_features/Regulator-admits-it-can-do-little-over-Bank-of-Ireland-price-hikes

However, note the date of the FCA response to Mr Tyrie.

There has been significant further movement since that letter which Justin hopes to release in due course. We are not at liberty to divulge what we know at this stage.

Reply to the comment left by "Mark" at "09/07/2013 - 09:08":

Hi Mark

In a previous post Justin said

"We requested that the OFT consider the complaint on the grounds that under the Unfair Terms in Consumer Contracts Regulations 1999 (“the Regulations”) the OFT has a duty to consider any complaint made to it. The OFT shares its enforcement powers under the Regulations with the FCA.

The OFT has discussed our complaint with the FCA and it has been agreed that the FCA as sector regulator is best placed to consider and respond to our complaint, including whether action under the Regulations is warranted.

We will therefore be hearing from the FCA and not the OFT. I have been in touch with the FCA and they indicated to me that we should expect a response in the next couple of weeks."

The Unfair Terms in Consumer Contracts Regulations 1999, and as the name would suggest, came in to force in 1999 if the FCA continue to say that anything pre 2004 is unregulated, as the article you have posted would suggest , then I fail to see how they can be " best placed to consider and respond to our complaint, including whether action under the Regulations is warranted."

Maybe the OFT is best placed after all.

Reply to the comment left by "Baggers" at "09/07/2013 - 13:31":

Link to the letter in full

http://www.parliament.uk/documents/commons-committees/treasury/130521%20-%20Martin%20Wheatley%20to%20Andrew%20Tyrie%20MP%20-%20Bank%20of%20Ireland.pdf

Reply to the comment left by "Baggers" at "09/07/2013 - 13:31":

As I said in my previous post, I expect that we will be able to publish an updated announcement very soon when Justin hears back from the FCA. A lot has happened since the FCA responded to Andrew Tyrie's letter back in May. That letter has, of course, only just been published so it is old news making the headlines as if it is new News.

Reply to the comment left by "Mark" at "09/07/2013 - 13:40":

9 July 2013
Yesterday the Treasury Committee published a letter sent to Andrew Tyrie MP from Martin Wheatley, Chairman of the Financial Conduct Authority dated 20 May 2013 regarding the Bank of Ireland’s recent move to increase the margin differential on its lifetime tracker mortgages.
The letter looks at various aspects of the banks conduct and the FCA broadly came to the conclusion that in some instances, the bank was legally entitled to increase the differential.
However, the FCA’s conclusion was based on numerous assumptions, based on information provided to it by the bank, some of which is not correct in the case of the borrowers represented by this firm. These are as follows:
The bank assured the FCA that it would only proceed with the increase where its ability to do so was clear from the documentation, and where the relevant clauses were included in both the mortgage contracts and mortgage offer documentation.
We have received over 300 complaints from people who were not aware that the bank was entitled to make this increase.
We have carefully reviewed the documentation provided by the bank and have concluded that, whilst in most cases, there is mention in the offer documentation of the bank’s ability to increase the differential, there is insufficient information provided as to what this means or in what circumstances the bank is able to do this. Further, in many cases, the offer documentation does not contain the relevant terms, but instead the bank seeks to incorporate them by reference to the current general mortgage terms and conditions. These general terms and conditions were not provided to the borrower with the offer letter, but with the mortgage deed, after the offer letter had been signed and contracts exchanged for the purchase of the property. In some cases, our clients do not recall ever having received a copy of the relevant mortgage terms and conditions.

The FCA seemed satisfied that the bank had waived its requirement to pay an exit fee if borrowers chose to re-mortgage and that it had therefore complied with one of the requirements of the Unfair Terms in Consumer Contract Regulations 1999.
In fact, the bank still requires those who are remortgaging to pay an administrative fee. Further, the assumption is made that borrowers can actually re-mortgage. In fact, it is likely that in a large number of instances, borrowers would not be able to re-mortgage with another lender.

The bank has stated that customers would be exempt from the increase if there was evidence to show that they had received communications from the bank which led them to believe that the differential would remain constant for the mortgage term.

We have seen marketing material issued by both Bristol & West and Bank of Ireland which in our view would lead borrowers to believe that the differential was fixed for the term. Indeed some offer letters describe the interest rate as being “base plus x% for term”. However in none of these cases have the bank agreed to reverse the increase.
On a positive note, this letter was sent before the FCA would have received our detailed submission based on our test case. Last week the FCA communicated with us that it is considering our submission. We expect a response by next month.
In addition, we have still to hear from the Financial Ombudsman Service who is also looking into this.
Finally, none of the above rule out the ability of borrowers to take legal action in their own names, against the bank. Obviously this action will be more costly, but given the large number of borrowers who have committed to fighting the increase, the costs can be brought down significantly. Indeed, the FCA in its letter did suggest that this might be an option for borrowers to take.
The Law Department

Interesting to see that the letter that is quite long does not really say a lot. In particular it does not go through the individual grounds upon which the differential can be increased and validate them. Is that not an essential part of the grounds upon which they can increase it? Its not use generalising like the FCA have below:

"However, at a very high level, for clauses of this type we focus on three factors: the provision of notice to the customer, whether the customer can exit without paying any costs or charges for early
repayment, and whether the term sets out the reasons for which a variation may be made. In this case the term requires notice to be given and contains a list of reasons for which the variation may be made. We also note that in certain circumstances early repayment charges
are waived. "

In my case and no doubt in a lot of others the "guarantee period" had expired and the mortgage offer relied upon the conditions as set out in the infamous "Mortgage Conditions 2002" of which many of us never received with the mortgage offer. So thus:

1. BOI are relying upon conditions in a document that we never received prior to signing the offer; and;
2. They, nor the FCA are validating the condition or conditions that enable them to increase the differential.

Reply to the comment left by "Gary Nock" at "11/07/2013 - 18:01":

Gary,
I have 7 mortgages with BOI. I have sent a long and detailed letter asking for their reasoning, validation and assumptions made when recalculating their revised rates. I cannot get an answer other than wishy washy rhetoric. I'm not sure where all this will lead but until I get a straight, honest and legally correct answer I will not be paying any increase!! I too never saw the conditions and I have asked them for proof that I have received, read and understood the booklet but surprisingly they have missed this particular question from their response!! Good Luck. Regards, Pete.

Hi Peter,
Unfortunately you may be cutting your proverbial nose off. I believe you are in the right, but that will not stop BOI wrecking your credit rating in the mean time, making it very difficult to remortgage in the future and if you do win it will be very difficult to rectify without a lot of hassle.
I would recommend paying if you can under protest the higher interest rate and joining our class action as Justin has some very strong arguments up his sleeve and together we are all stronger.

Reply to the comment left by "Neil Patterson" at "15/07/2013 - 09:15":

Justin has posted about this strategy in this thread. A few borrowers are using this strategy as it might bring the matter to a head quicker. As Neil and Justin have said though, it is a strategy not without risk.