Fixed Mort - Taking EBS to the Regulator

D

d_mcevoy

Guest
In May 2007 I to moved my mortgage from IIB to EBS. During this process I was advised by the bank to take a 5 year 5.4% fixed mortgage (I have email correspondence to this affect)

As a result of the market change, I enquired about switching to a variable rate. I was quoted 19K! Now I accept that there should be a penalty involved but I find this figure ridiculous especially as there was mitigating circumstances.

I am now referring the case to the regulator given the initial advise the bank gave me and there unwillingness to compromise on the break out penalty. Has anyone lodged a similar complaint, and if so what was the result?
 
so you signed a contract and you want to get out of it and dont agree with the penalty.
 
I personally don't think you've got a leg to stand on.

The break out fee is calculated by whatever equation EBS uses. You can ask them what the equation is, and you can work it out for yourself.
But just 'casue the markets have changed doesn't make the bank liable. They "advised" you, they didn't force you.
Just before interest rates started coming down, we were informed that our variable rate was being increased to 6.49%.
Your 5.4% fixed was working well for you then as rates were increasing, so you can't really complain now that things have turned around.

I'll put it another way. If rates kept going the way they were, and the standard variable rate was now at 7%, you wouldn't be getting onto the regulator to congratulate your bank on saving you money.
 
I am hoping for advise from people who have pursued a similar route not a debate on the issue of the mortgage being mis sold or not.
 
D

Don't ask questions on Askaboutmoney if are not prepared to read the answers you get.

You have made no case whatsoever for getting a reduction, so the implication of the previous post is that you are wasting your time complaining.

If you have some basis for the complaint, tell us.

Brendan
 
Brendan,

I have no issue reading answers given however I don't see the point of "well you should have know better" replies which I have frequently seen posted.

When I applied for the mortgage it was on the basis of going with a variable rate. The bank heavily advised me to go for 5 years fixed. Admittedly I wasn't forced however there was no advise given on any penalties.
 
d_mcevoy said:
I am now referring the case to the regulator given the initial advise the bank gave me and there unwillingness to compromise on the break out penalty.
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I don't see that there is any onus on the EBS to compromise nor is there any basis for your complaint. If it were me I'd write to the EBS saying that I was being made redundant and ask what happens if/when I go into arrears. I'd also ask that, to afford me breathing room, they let me switch from fixed to variable and that they waive any associated charge - but maybe you've burnt that bridge already. You need to find out who in the EBS has the authority to make a decision in your favour and contact them directly.
 
In any case, the regulator does not look at complaints - you would need to go the Financial Services Ombudsman.
 
I have exhausted all avenues with EBS. When I applied to move to a variable rate I was quoted 11K, however when I went to proceed with this option the cost had moved to 19K.

I take on board people's view that I am sworn to whatever I signed however in my opinion the EBS advised me to buy this product and are now penalising me for doing so.
 
d_mcevoy said:
I have exhausted all avenues with EBS. When I applied to move to a variable rate I was quoted 11K, however when I went to proceed with this option the cost had moved to 19K.

I take on board people's view that I am sworn to whatever I signed however in my opinion the EBS advised me to buy this product and are now penalising me for doing so.
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It probably moved from 11K to 19K as the cost to the bank changed over that period as interest rates fell. I'm sure how they calculated the fee didn't change.

Your only get out is the terms and conditions of the original mortgage and whether a break out fee is mentioned there. To be honest I'd be stunned if it wasn't and that the Ombundsman would come to a similar conclusion.
 
As is already pointed out the basis for calculating the €19k is most likely clearly stated in your contract. On day 1 this cost would have been zero.

Because interest rates have since moved there is a large penalty and there is no way EBS can be held responsible for falling interest rates.

You have 3.5 years to go on this deal. I personally would not be surpised to see much higher interest rates in a couple of years.
 
DerKaiser said:
As is already pointed out the basis for calculating the €19k is most likely clearly stated in your contract. On day 1 this cost would have been zero.

Because interest rates have since moved there is a large penalty and there is no way EBS can be held responsible for falling interest rates.

You have 3.5 years to go on this deal. I personally would not be surpised to see much higher interest rates in a couple of years.
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Agreed. In my opinion, the worst thing you could do would be to change now. You would effectively pay up front the difference in interest that you would pay at 5.4%. Unless rates stay at their current level or lower for the rest of the 5 year term you'll end up paying even more interest as you get exposed on the upside with the Variable rate.

Only break now if you think rates will be lower than TODAYS rate for the rest of the 5 year period.
 
The difference between my fixed rate and the current variable rate is 600 euro a month. Surely it would make sense to switch now (if this was possible) for the original figure quoted of 11K?
 
Best of luck with it, even if the penalty is mentioned in the terms and conditions you may have a case for misselling if you have documentary evidence showing that EBS advised you to take out a fixed rate product without mentioning the downside of such a course of action.

They should have at least explicitly mentioned that there may be penalties for redeeming the mortgage early, changing to variable, overpaying the mortgage and paying back a lump sum.

Also did you sign/were you given a reasons why letter/statement of suitability where the reasons for recommending such a product were outlined to you?

I would be surprised if EBS haven't covered themselves on this but then again can you be surprised at the incompetence of a bank or building society these days?
 
Yes I have documentary evidence showing that EBS advised me to take out a fixed rate product without mentioning the downside of such a course of action.

There was no statement of suitability, the Managers advise was to take the fixed mortgage as he expected 3 rate jumps in the short term.

I have registered the complaint to the Financial Services Ombudsman.
 
Fair play.
I take it you have gone through the correct procedures?

[broken link removed]
 
d_mcevoy said:
The difference between my fixed rate and the current variable rate is 600 euro a month. Surely it would make sense to switch now (if this was possible) for the original figure quoted of 11K?
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But that's not the figure they've quoted you, it's 19K. And that figure may grow if there are any further ECB rate changes between now and when you sign. Also you haven't taken Mortgage Interest Relief into account. The more interest you pay the higher this value is. The likelihood is that difference would be closer to 450 (picks number out of thin air). 19K is what it would cost them - and save you - if you were currently on the Variable. If your calculations come up with a different number you more than likely have neglected something.
 
NorfBank said:
Also did you sign/were you given a reasons why letter/statement of suitability where the reasons for recommending such a product were outlined to you?
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Would this have been relevant to mortgage providers at the time the OP took out the mortgage?
 
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