Thanks for your comments mister32.
Any idea what your friend's contract said Dan? That's key.
Thanks Sarenco. It would be great of you had time to comment on this. I suspect it would help, not just my pal, but many others also.
My understanding is that there was an initial tracker mortgage and that when my pal switched to the fixed term loan, he was given a new contract. The fixed term contract says that the interest rate will be reviewed at the expiry of the fixed term but does not elaborate on the nature of this review. The crux of the matter seems to be that my pal thought that this fixed term contract was effectively an addendum to the original contract and the bank is claiming that the fixed term contract is a completely new contract which effectively extinguishes any rights of the old contract.
In my mind, if my pal is right that the original contract still "exists", then he should have been allowed to return to the tracker and if the bank is right then the bank should have provided adequate warnings at the point of establishing the fixed rate contract on the implications of entering into this contract. For the avoidance of any doubt, in my opinion, he should have been told at the outset of the fixed term contract - and not at the end of the contract - that he would not have the right to return to a tracker.
So to restate my questions:
(a) Does the introduction of a fixed term contract in the manner described, where the fixed term contract is silent on what precisely happens at the expiry of the 5 year term, constitute a totally new contract or should the original T&Cs apply at the end of the fixed rate period?
(b) What were the relevant disclosure requirements in 2006?
(c) What are the consequences if a bank breached these disclosure requirements
As mister32 rightly pointed out, it would be helpful if the Central Bank provided meaningful guidance in this regard.