Bank of Ireland increase differential on tracker rates

Reply to the comment left by "Paul Brindley" at "15/11/2013 - 16:36":

Hi Paul,

You may be using the same arguments as Justin for the increase in the differential fo tracker rates. However, there was an expectation that everyone on a tracker rate would continue to have the same differential during the lifetime of the tracker. Bank of Ireland are using a clause contained in some contracts to increase the differential based on exceptional circumstances which is what Justin is arguing against.

Anyone on a SVR has an understanding that the bank can raise rates and there is no restriction on the amount of the increase. The increase in SVR is industry wide and all the banks are using the same reason. Some are even higher than BOI.

You are essentially arguing against the increases imposed on SVR by all the banks.

Reply to the comment left by "Denise Donovan" at "15/11/2013 - 17:18":

You may be right on all scores, we'll see.

But there do appear to be some pretty unusual circumstances in Bank of Ireland's case which may not apply in other banks.

Reply to the comment left by "Paul Brindley" at "15/11/2013 - 16:33":

Could we have an update on the adjournment please

Adjourned generally with no set date for us to go back to court, the repo dies if they don't list it for the next 12 months. So I've not been able to check the size of their cohonas. We'll see what the next week or so brings ...

This may be of interest

I have recently read a trade press article that confirms the FCA has been approached by a number of lenders with a view to increasing their SVR's

Article dated 20/11/2013

A number of mortgage lenders have approached the Financial Conduct Authority to discuss possible changes to their tracker mortgage contracts, the regulator has revealed.

FCA supervision director Clive Adamson has written to banks and building societies outlining their responsibilities ahead of any variation to their standard variable rates or other contract terms. He said: “A number of mortgage lenders have engaged with us recently about changing their mortgage contracts, particularly on SVRs.

“We are writing to clarify our position on how you should engage with us if you want to change your SVR and remind you of the relevant regulations and rules that apply.”

Mortgage lenders do not need to notify the FCA before changing their SVRs, he said, but they must be able to show they have complied with regulation.

Lenders who take this step could find they are in breach of the Unfair Terms of Consumer Contracts Regulations 1999 or incompatible with the FCA Principles for Businesses, he said. Adamson also reminded lenders of the regulator’s plans to consult on fairness in the context of changes to mortgage contracts.

In May, the Bank of Ireland hiked rates on tens of thousands of tracker mortgages. Four months later, the West Bromwich Building Society announced plans to increase rates on 6,700 tracker mortgages by two percentage points this December.

The Law Department principal Justin Selig, who is acting for landlords affected by the Bank of Ireland and West Brom rate rises, said the regulator had previously described the Bank of Ireland rate rise as a one-off. He said: “It obviously isn’t a one-off. Look what happened with West Brom.”
He said if the landlords take on the lenders and win, their victory could prevent further rate rises of this kind:
“One of the things we are worried about is other lenders trying to use the small print to try to get themselves out of a tricky situation. We are trying to resist that as much as we can.”
While the FCA appeared to accept the lenders’ decisions, in October FCA mortgage and consumer lending director Linda Woodall stressed they should not set a precedent for other lenders. “We recognise that there is an issue to be debated in the industry about customers’ expectations and changing of terms and conditions, even if correct,” she said.

Who can put this series of words into a well known Word or phrase. Stable. Horse. Bolted. Door. The ineffectiveness of the FCA has been seen as weakness by the lenders. I fear that BOI and WBBS are the first of many.

I managed to track down my mortgage adviser who sold me the product 10 years ago. He informs me that he thinks Bank of Ireland has been challenged in court regarding increasing the differential on their tracker mortgages for residential and buy-to-let mortgages and unfortunately they have the right legally, if not morally, to make the change.

Does anyone know if it is true that BoI has been challenged in court over this as I don't want to be wasting my time and money pursuing this if a verdict has already been reached?

Theresa I am sure if there had already been a decision on this then either Justin and the legal team would have found it. And being as the differential was only changed in Feb / March this year then a case would not have come to court yet. The FA is probably a) getting mixed up with various other building societies who have hiked up SVRs or b) is trying to cover his backside as he thinks a claim might be on its way.

Reply to the comment left by "Gary Nock" at "20/11/2013 - 14:59":

Skipton BS broke their contracted collar in 2010. This impacted some 60,000 borrowers. Norwich & Peterborough BS also changed their contractual terms.

If you read Skiptons full published accounts the deteriorating financial position was very obvious. Base rate has remained low for nearly another 4 years.

BOI (UK) have already sold mortgages onto the Mortgage Works (part of Nationwide). NW subsequently invoked their right to change the interest rate charged.

There's a much larger game in play. Which may years to play out.

Reply to the comment left by "Colin Childs" at "22/11/2013 - 19:16":

http://bit.ly/1efWRBY - my current views.