# High Court dismisses appeal by Dankse against Ombudsman tracker decision



## Brendan Burgess (23 Feb 2021)

This decision has just been published:

pdf (courts.ie)

In summary

When a customer of National Irish Bank who had a tracker, fixed their mortgage rate, the old mortgage was cancelled, and a new loan agreement was taken out.

The Ombudsman ruled that it was not clear that they were taking out a new loan agreement and that they would lose their tracker.

He ordered that they be given back the tracker from 2006 the date they fixed as the basis for their claim was that they would not have fixed, had they known that they were going to lose their tracker. 

The Ombudsman referred it to the Central Bank because of its systemic implications.

Danske, who took over NIB, appealed the case to the High Court.

The High Court rejected Danske's arguments.

Brendan


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## Brendan Burgess (23 Feb 2021)

A few very important points relating to the Ombudsman in this case:


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## Brendan Burgess (23 Feb 2021)

The key thing here is that the Central Bank will tell Danske to apply this to all other impacted customers. 

So anyone who fixed and lost their tracker.

Brendan


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## PadKiss (23 Feb 2021)

I am so pleased with this outcome and yes Brendan it does affect many customers of Danske (formerly National Irish Bank) I have already written to the CBI re same and the application of the outcome to the others affected. 
This was an important one to have upheld. There now will need to be a Redress process established to address the entire cohort of similar cases. Padraic


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## Brendan Burgess (23 Feb 2021)

_18. *The core findings in the [Ombudsman's] Decision were that*:
• The ‘Home Loan Questions and Answers’ section of the Final Financial Summary document, and the fixed rate home loan documentation, did not disclose the real nature of the transaction;
• The appellant failed to inform the complainants appropriately that if they wanted a fixed interest rate, their existing mortgage loan would have to be redeemed, meaning that the terms and conditions applicable to that loan would no longer apply;
• It was not clear to the complainants that, by signing the fixed rate home loan in July 2006, the contractual entitlement to a tracker interest rate of the ECB plus 0. 99% that had existed under their previous 2005 tailored home loan ECB tracker would no longer apply to their new loan;
• The complainants did not know that they were entering into a new mortgage subject to different conditions._


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## Brendan Burgess (23 Feb 2021)

_24. Under s. 56(7), the Oireachtas places an obligation on the Ombudsman to inform the Central Bank or the Pensions Authority where he or she considers, during an investigation or following the completion of an investigation, that there is a persistent pattern of complaints, a persistent pattern of facts or evidence arising from the complaints, or any other matter of concern to the Bank or Pensions Authority.

This power suggests that the Oireachtas viewed the work of the Ombudsman in reviewing and determining individual complaints as having an additional role in bringing systemic problems to the attention of the relevant regulatory authorities.

(Indeed, in this case, the respondent decided to refer the decision to the Central Bank because of the truncated manner in which the transaction took place together with the lack of clarity in the documentation as to the nature of the transaction (see p.24 of the Decision))._

BB's comment: The "truncated manner" refers to the fact that when the borrowers took out their original loan, they went to a solicitor and had to comply with Anti-moneylaundering rules and many others.  But with the "new" contract, most of these were dispensed with.


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## Brendan Burgess (23 Feb 2021)

_27. Those subsections make it clear that the Ombudsman both has jurisdiction to uphold

on grounds involving what I might describe as black letter law issues i.e. contrary to law, or based on a mistake of law

but also to uphold on grounds where there has been no breach of law at all, including quite strikingly upholding a complaint where the conduct is in accordance with law, but the Ombudsman holds that the application of that law was detrimental to the complainant.

The breadth of the Ombudsman’s jurisdiction under s.60(2) cannot be underestimated:

he or she is effectively given a jurisdiction to override the law in certain situations, in the sense that although a complainant may have no remedy in law, including under the law of contract, nonetheless they can have their complaint upheld.

In other words, a financial service provider can act perfectly lawfully but nonetheless find that a complaint is upheld against it carrying with it an obligation to make specified redress.



38. In Utmost Paneurope, the FSPO upheld a complaint about significant illness cover on the grounds at s.60(2)(b) and (g). Simons J. observed in respect of the jurisdiction of the Ombudsman as follows:

“35. The Ombudsman appears to enjoy what might be described as a hybrid jurisdiction, whereby he may adjudicate not only on contractual disputes, e.g. where a complainant alleges that the conduct of a financial service provider in refusing to honour a claim is in breach of contract,

but may also make determinations and direct remedies in respect of conduct which, while not contrary to law, is found by the Ombudsman to be “unreasonable” or “unjust”.”_


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## Brendan Burgess (23 Feb 2021)

_58. Here, I do not think the Ombudsman made a mistake in deciding the language was not sufficiently clear.

There was enough material before him to come to that decision.

At page 9 of his decision he identified the final financial summary that had been provided to the complainant, noting that

under the question “loan purpose”, the following answer was given: “restructure of lending”,
that under the heading “borrower type” it had the answer “repackage” and
that a credit application was submitted to the appellant for a fixed rate home loan on 28 June 2006 and in the comments section of the credit application the following appears: “amending existing mortgage to a 3 year fixed rate”._


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## Brendan Burgess (24 Feb 2021)

In an earlier post, I said that the Central Bank will tell Danske to roll this out to other people in the same position.

But, on reflection, all the Central Bank can do is to ask Danske to roll it out, and Danske may well refuse. 

Each person may then have to make their own complaint to the Ombudsman and if the circumstances are the same, the Ombudsman should uphold the complaint.

Brendan


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## Brendan Burgess (1 Mar 2021)

I am really surprised that this systemic issue has not received more publicity? 

Most of the reports in the media treated it like any other court case, but it's similar to the AIB Prevailing Rate case in that it has implications for other Danske customers who had a tracker and lost it because they fixed.

Niall Brady covered the implications of it in yesterday's Sunday Times where Danske confirmed _“it will liaise with the Central Bank of Ireland on finalising the number of impacted customers”. The Central Bank is required to investigate the case for evidence of systemic overcharging, potentially affecting other customers with similar mortgages. “We are currently examining the High Court judgment in that context,” it said._









						Danske to pay out on tracker refusal
					

Danske Bank is to identify hundreds of former customers in line for redress and compensation after the High Court agreed that the bank acted unreasonably and u




					www.thetimes.co.uk
				




People need to notified as quickly as possible. A lot of the NIB/Danske mortgages were issued at ECB +0.5%.  Since then, they have been paying very high rates either to Danske or to whichever bank they switched to.

There must be hundreds of people in line for substantial redress. 

_Padraic Kissane, the financial adviser who exposed the tracker mortgage scandal, said he was aware of at least 40 households that could be entitled to substantial redress, as Danske Bank offered the best tracker deals during the boom._


Brendan


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## Johnno75 (1 Mar 2021)

The case outcome is interesting in that there have been very few tracker-related court cases (at least that I am aware of) that have gone to a full decision.

The banks should take note of the decision for (1) its precedent value and (2) the emerging attitude of the courts to tracker cases (as demonstrated in this case) where trackers should have been given to customers by the banks but weren’t.

From my reading of the case, the issue related to a point of law and the interpretation of statute, but the case has wider implications, in my view, for the banks should they seek to fight such cases.


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## Brendan Burgess (1 Mar 2021)

Hi Jay

Agree. This was a ringing endorsement by the High Court of the Ombudsman's approach. 

The judge was clear, that even if she had disagreed with the Ombudsman's decision, she would not have interfered, as she would defer to his specialist expertise.

She noted the very strange remit of the Ombudsman. Even if the lender has fully complied with their contractual obligations, the legislation allows the Ombudsman to find against them on the issue of fairness. 

It's a very clear message to the lenders that they should accept the Ombudsman's decision. 

But it's also a very clear message to the 90% (?) of complainants who have their complaints rejected in full or in part, that they should not appeal either. 

Brendan


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