Following a request from Brendan I am posting details of my dealings with Ulster Bank, the FSO and the happy return of my tracker!
History
I purchased a house in May 2005 and took out a tracker mortgage with Ulster Bank. ECB rate + 1.05%. I also have a UFirst account which I still hold that allowed a slight reduction in the rate offered.
In October 2006 with rates starting to increase I made the decision to switch to a fixed rate for 2 years. When the two years was up I took a 3 month mortgage holidays as was allowed by the product but was told by the bank I could not select a rate to go back onto until the holidays was finished. The bank had given me a sheet that outlined Standard Variable Rate, further fixed rates and tracker rates. When I contacted the branch later in October 2008 I was told tracker products were no longer available.
The wording of the fixed rate form stated that if I didnt make a decision I would revert to "Ulster Bank Home Loan rate ........in accordance with General Condition 2 of the Offer of Advance originally accepted by you". And that is the important part for anyone trying to get your tracker back from Ulster Bank
In October 2011, I realised that I had a case for claiming my tracker back.
Obviously I had spent over 3 years on the Standard Variable Rate before realising that I shoudl have been entitled to my tracker back.
My Initial Complaint to Ulster Bank
I wrote to the bank in October 2011 asking for the return of my tracker. The wording of the letter is below:
With regards to the above mortgage account I am writing to express my concern that I had in fact been incorrectly placed onto a Standard Variable Rate at the expiry of my fixed period which ended on 31st July 2008.
I had spoken with a customer service representative who commented that my fixed rate appendix document would have stated that at the expiry of the period I would revert back to a Standard Variable Rate. This is not the case in this instance, and I have attached a copy of said document which states “the Ulster Bank Home Loan Rate shall apply in accordance with General Condition 2 of the Offer of Advance originally accepted by you ”. This rate is noted as being the ECB rate plus 1.05% and I have enclosed a copy of both the Offer of Advance and the Fixed Rate agreement.
I would therefore request that I be returned to the Tracker product I appear to be entitled to and should this be the case, that any overpayment of interest as a result be refunded.
If I do not hear further within the next ten working days I will seek to refer this matter to the Financial Services Ombudsman.
Bank's Response
Ulster's banks initial response having "looked" into my complaint was to state that they no longer offered tracker mortgages and therefore deemed I was not entitled to it. Any response from them never dealt with the question asked - regarding the contractual entitlement. And I would have to conclude that the process is such to frustrate you to the point that you no longer wish to pursue the matter.
I must also say at this stage that I have a friend that was in the exact same position and I have drafted letters for them and they were given their tracker back by Ulster Bank without having to effectively run the gauntlet on it!
My arguments in the complaint to the Ombudsman
This was simply that:
- fixed rate authority form stated I would be returned to the Ulster Bank Home Loan rate as per General Condition 2 of the offer of advance
- that there was no indication definition anywhere in their terms and conditions that stated this was a Standard Variable Rate
- also that their advice that I could not choose a product till after the holiday voided me choosing a tracker (kind of chancing my arm with
that)
Ulster's Banks Defence of my complaint
The FSO put a series of questions to the bank. The first and main one being
"In your final response letter you stated that the term Ulster Bank Home Loan Rate refers to the bank's standard variable rate. Was the complainant ever advised of this? If so, when and by what means"
They argued the term Home Loan, as in the original offer of advance is defined as - money borrowed from bank or similar organisation in order to buy a house or apartment - and therefore this terms is used to describe the mortgage itself.
"The term home loan therefore is the standard rate applied to a home loan account and is not a specified product like for example flexible mortgage, which is the term used in the complainants offer of advance to describe the original interest product of same. This condition states that the flexible mortgage tracks, the movement of the ECB Base rate with an agreed fixed margin which is fixed for the life of the loan.
General Condition 2 of the offer of advance stipulates how the interest is applied to an account and what happens regarding interest when the account is redeemed which is why it is referenced in the Fixed Rate authority form.
If the Ulster Bank Home Loan rate was used to describe a tracker interest rate product this condition would stipulate, that the rate of interest would track the movement of the ECB base rate and any announcement regarding variation to same would be published and announced by the ECB directly not the bank.
We consider that this element of offer of advance should have been explained to the Complainant by their legaol representatives, prior to acceptance of same and subsequent draw down of loan.
We do not provide any advice with issuing a Fixed Rate Authority form nor are we obliged to provide same. Therefore, we did not provide the Complainants with a definition of the term home loan rate"
Other questions included whether I was advised about the cost implications of switching, whether the bank had changed their Fixed Rate Authority Form, and whether they had anything to add to their final reponse letter. I don't think there is any need to go into these answer but if anyone wants to know I am more than happy to oblige.
The Ombudsman's decision
He states in his decision:
"As both parties are relying on the same provision - the Complaniant to bolster his case that he was led to believe on expiry of the fixed rate period, the tracker rate of interest outlined in the offer of advance originally accepted would apply to his loan if no other product was selected; the Bank to support its contention that the Complainant was not informed that his loan would revert to the original tracker rate following the conclusion of the fixed rate term - and in order to make a definitive finding on the matter it is necessary to scruitinise the language used by the bank..."
He goes onto he found the dual terminology used by the bank confusing and quotes a number of paragraphs that I can include if necessary but in essence he then states
"While the bank's reponse to my question was both lengthy and detailed, it is the very last sentence of the reply that I consider to the the salient portion [this is where they stated previous that "therefore we did not provide the complainant with a definition of the term home loan rate"] It seems the Complainant was never advised that the Ulster Bank Home Loan Rate is also known as the standard variable rate. It seems to be me that the is nomenclature utilised by the Bank that lies at the very heart of the matter. .............
...................I do not believe the Complainant was adequately advised of the fact that the standard variable rate would apply to his house mortgage at the conclusion of the fixed rate period, as opposed to the tracker rate, if he opted not to select an alternative product.
It is my considered opinion that the terminology used by the Bank in the above quoted paragraph of the Fixed Rate Authority is ambiguous, vague and misleading...............
.......I find that in view of the discrepancies in the terminology used by the bank and the confusion caused thereby, when the Complainant signed the Fixed Rate Authority, he formed a legitimate expectation that his house mortgage would revert to the tracker rate of 1.05% above the ECB rate, upon termination of the fixed rate term.
For the reasons outlined above, this complaint has been substantiated. I find the bank acted wrongfully by failing to over the Complainant the option of reverting to the original tracker rate of 1.05% above the ECB rate upon expiry of the fixed rate periof of the 31 July 2008.
Sorry for the long-windednes of this but hopefully it may help some people. I obviously got this back dated until 2008 which was a large chunk of change of a refund.
However you also need to be aware in these instance you have may have a liability to Revenue as you would have claimed more TRS than you would be entitled to.
More than happy to provide the actual documentation to anyone who feels it may be of use to them.
History
I purchased a house in May 2005 and took out a tracker mortgage with Ulster Bank. ECB rate + 1.05%. I also have a UFirst account which I still hold that allowed a slight reduction in the rate offered.
In October 2006 with rates starting to increase I made the decision to switch to a fixed rate for 2 years. When the two years was up I took a 3 month mortgage holidays as was allowed by the product but was told by the bank I could not select a rate to go back onto until the holidays was finished. The bank had given me a sheet that outlined Standard Variable Rate, further fixed rates and tracker rates. When I contacted the branch later in October 2008 I was told tracker products were no longer available.
The wording of the fixed rate form stated that if I didnt make a decision I would revert to "Ulster Bank Home Loan rate ........in accordance with General Condition 2 of the Offer of Advance originally accepted by you". And that is the important part for anyone trying to get your tracker back from Ulster Bank
In October 2011, I realised that I had a case for claiming my tracker back.
Obviously I had spent over 3 years on the Standard Variable Rate before realising that I shoudl have been entitled to my tracker back.
My Initial Complaint to Ulster Bank
I wrote to the bank in October 2011 asking for the return of my tracker. The wording of the letter is below:
With regards to the above mortgage account I am writing to express my concern that I had in fact been incorrectly placed onto a Standard Variable Rate at the expiry of my fixed period which ended on 31st July 2008.
I had spoken with a customer service representative who commented that my fixed rate appendix document would have stated that at the expiry of the period I would revert back to a Standard Variable Rate. This is not the case in this instance, and I have attached a copy of said document which states “the Ulster Bank Home Loan Rate shall apply in accordance with General Condition 2 of the Offer of Advance originally accepted by you ”. This rate is noted as being the ECB rate plus 1.05% and I have enclosed a copy of both the Offer of Advance and the Fixed Rate agreement.
I would therefore request that I be returned to the Tracker product I appear to be entitled to and should this be the case, that any overpayment of interest as a result be refunded.
If I do not hear further within the next ten working days I will seek to refer this matter to the Financial Services Ombudsman.
Bank's Response
Ulster's banks initial response having "looked" into my complaint was to state that they no longer offered tracker mortgages and therefore deemed I was not entitled to it. Any response from them never dealt with the question asked - regarding the contractual entitlement. And I would have to conclude that the process is such to frustrate you to the point that you no longer wish to pursue the matter.
I must also say at this stage that I have a friend that was in the exact same position and I have drafted letters for them and they were given their tracker back by Ulster Bank without having to effectively run the gauntlet on it!
My arguments in the complaint to the Ombudsman
This was simply that:
- fixed rate authority form stated I would be returned to the Ulster Bank Home Loan rate as per General Condition 2 of the offer of advance
- that there was no indication definition anywhere in their terms and conditions that stated this was a Standard Variable Rate
- also that their advice that I could not choose a product till after the holiday voided me choosing a tracker (kind of chancing my arm with
that)
Ulster's Banks Defence of my complaint
The FSO put a series of questions to the bank. The first and main one being
"In your final response letter you stated that the term Ulster Bank Home Loan Rate refers to the bank's standard variable rate. Was the complainant ever advised of this? If so, when and by what means"
They argued the term Home Loan, as in the original offer of advance is defined as - money borrowed from bank or similar organisation in order to buy a house or apartment - and therefore this terms is used to describe the mortgage itself.
"The term home loan therefore is the standard rate applied to a home loan account and is not a specified product like for example flexible mortgage, which is the term used in the complainants offer of advance to describe the original interest product of same. This condition states that the flexible mortgage tracks, the movement of the ECB Base rate with an agreed fixed margin which is fixed for the life of the loan.
General Condition 2 of the offer of advance stipulates how the interest is applied to an account and what happens regarding interest when the account is redeemed which is why it is referenced in the Fixed Rate authority form.
If the Ulster Bank Home Loan rate was used to describe a tracker interest rate product this condition would stipulate, that the rate of interest would track the movement of the ECB base rate and any announcement regarding variation to same would be published and announced by the ECB directly not the bank.
We consider that this element of offer of advance should have been explained to the Complainant by their legaol representatives, prior to acceptance of same and subsequent draw down of loan.
We do not provide any advice with issuing a Fixed Rate Authority form nor are we obliged to provide same. Therefore, we did not provide the Complainants with a definition of the term home loan rate"
Other questions included whether I was advised about the cost implications of switching, whether the bank had changed their Fixed Rate Authority Form, and whether they had anything to add to their final reponse letter. I don't think there is any need to go into these answer but if anyone wants to know I am more than happy to oblige.
The Ombudsman's decision
He states in his decision:
"As both parties are relying on the same provision - the Complaniant to bolster his case that he was led to believe on expiry of the fixed rate period, the tracker rate of interest outlined in the offer of advance originally accepted would apply to his loan if no other product was selected; the Bank to support its contention that the Complainant was not informed that his loan would revert to the original tracker rate following the conclusion of the fixed rate term - and in order to make a definitive finding on the matter it is necessary to scruitinise the language used by the bank..."
He goes onto he found the dual terminology used by the bank confusing and quotes a number of paragraphs that I can include if necessary but in essence he then states
"While the bank's reponse to my question was both lengthy and detailed, it is the very last sentence of the reply that I consider to the the salient portion [this is where they stated previous that "therefore we did not provide the complainant with a definition of the term home loan rate"] It seems the Complainant was never advised that the Ulster Bank Home Loan Rate is also known as the standard variable rate. It seems to be me that the is nomenclature utilised by the Bank that lies at the very heart of the matter. .............
...................I do not believe the Complainant was adequately advised of the fact that the standard variable rate would apply to his house mortgage at the conclusion of the fixed rate period, as opposed to the tracker rate, if he opted not to select an alternative product.
It is my considered opinion that the terminology used by the Bank in the above quoted paragraph of the Fixed Rate Authority is ambiguous, vague and misleading...............
.......I find that in view of the discrepancies in the terminology used by the bank and the confusion caused thereby, when the Complainant signed the Fixed Rate Authority, he formed a legitimate expectation that his house mortgage would revert to the tracker rate of 1.05% above the ECB rate, upon termination of the fixed rate term.
For the reasons outlined above, this complaint has been substantiated. I find the bank acted wrongfully by failing to over the Complainant the option of reverting to the original tracker rate of 1.05% above the ECB rate upon expiry of the fixed rate periof of the 31 July 2008.
Sorry for the long-windednes of this but hopefully it may help some people. I obviously got this back dated until 2008 which was a large chunk of change of a refund.
However you also need to be aware in these instance you have may have a liability to Revenue as you would have claimed more TRS than you would be entitled to.
More than happy to provide the actual documentation to anyone who feels it may be of use to them.
