KBC KBC told brokers" all fixed rate loans will roll onto trackers on expiry"

[Sarenco]

That form constituted an advertisement.

Ok but that still doesn't mean that a borrower must be offered all (or even a range of) available mortgage products by a lender under the CPC, which was your original point.

When you say the letter constituted a "recommendation" could you be more specific? Did it say something generic like "if you are concerned about rising interests, you may wish to consider fixing..."? Trackers were still widely available in 2006 so presumably you decided it was a good idea to fix.

 

[peemac]

I would argue that the capped tracker was "the most suitable" product available for those on trackers who wished for some certainty. That was not offered.

Yes trackers were widely available, in fact Trackers and fixed were effectively the only two options offered in the market from about 2004 - 2007. Hence the words "standard variable rate" would not be known by many as a specific rate and no glossary detailing what this rate meant was available and no detailing of how such term could affect the mortgage for the entire life of the mortgage. If anything the terms were confusing as it said that the terms applied for the fixed rate period only and were in addition to the terms of the mortgage. So for the lay person, and possibly many professionals, the mortgage reverted back to the terms in the main document.

b) where it offers a selection of product options to the consumer, the product options contained in the selection represent the most suitable from the range available to the regulated entity;

Considering how many people signed this thinking that itb was just 3 years and then reverted back to tracker and in addition to the flyer above, it shows that possibly even KBC themselves understood it would all rever to tracker and then they simply got lucky.

 

[Sarenco]

Did you disclose to KBC that you wanted "some" (but not absolute) certainty regarding the maximum rate you could be charged? A regulated service provider can only make a judgment as to the suitability of a product on the basis of what is disclosed to it by its customer.

You said yourself that KBC didn't offer you a selection of product options so the highlighted text would not appear to be relevant.

I disagree that a reasonably prudent and observant borrower would not have understood the meaning of the phrase "standard variable rate" (as opposed to a tracker rate) in 2006 or that the phrase is in any way confusing. You are obviously free to disagree on this point.

 

[peemac]

Did you disclose to KBC that you wanted "some" (but not absolute) certainty regarding the maximum rate you could be charged? A regulated service provider can only make a judgment as to the suitability of a product on the basis of what is disclosed to it by its customer.

You said yourself that KBC didn't offer you a selection of product options so the highlighted text would not appear to be relevant.

I disagree that a reasonably prudent and observant borrower would not have understood the meaning of the phrase "standard variable rate" (as opposed to a tracker rate) in 2006 or that the phrase is in any way confusing. You are obviously free to disagree on this point.

I see your point, but it was KBC that were sending out these "special fixed rate" adverts with each rate change suggesting that you consider them. In my opinion, they should ahve also offered the 3 year capped tracker as an option.

as for he meaning of standard variable rate, you need to look at the average lay person and what was the "norm" a the time. I looked though many months of newspapers and many adverts and it was tracker and fixed rate mentioned - I don;t think I saw one single advert quoting or stating "standard variable rate" and no such rate was mentioned in any of my correspondance with IIB prior to taking out the mortgage. The phrase was simply not in use for the ordinary punter from 2005 until mid 2007 and it was not even in the glossary of terms of IIB at the time.

 

[Sarenco]

Fair enough but it was a generic advertisement rather than a recommendation that was tailored to address any particular customer's individual requirements.

I really can't agree that consumers, in general, would have been unaware of the difference between trackers and other variable rate loan products during that period. There are plenty of threads on this forum from that period on this topic and the Central Bank ran a high-profile TV advertising campaign - remember the guy on the bus?

In my opinion, it is simply not tenable to argue that anybody would have ever thought that a variable rate that made no mention of any margin over any reference rate actually referred to a tracker.

 

[todo]

In my opinion, it is simply not tenable to argue that anybody would have ever thought that a variable rate that made no mention of any margin over any reference rate actually referred to a tracker.

I completely disagree with this, there are plenty of people who thought the banks had their best interests at heart. You can be sure that if the ecb rate kept rising then the banks would respond that "variable rate" related to a tracker mortgage. The banks can't have it every way, the term "Variable Rate" is ambiguous. They did not spell it out in plain simple english and they also hid behind clever terms and conditions.

Its time the consumer protection code was enforced, its not acceptable how long this is all taking.

 

[Sarenco]

I completely disagree with this...

That's absolutely fine, obviously, but I'm not at all clear what exactly you are disagreeing with me about.

I don't understand what you mean by the following:-

You can be sure that if the ecb rate kept rising then the banks would respond that "variable rate" related to a tracker mortgage.

The ECB refi rate did, in fact, keep rising during this period. It only fell after the financial crisis erupted in Q4 2008.

What aspect of the CPC, in the form that existed back in 2006, are you arguing was not observed?

You seem to be conflating arguments based on contractual wording and arguments based around alleged breaches of the CPC.

Are you arguing that the transparency and disclosure requirements set out in the CPC were not observed? If so, could you be more specific?

How can you construct the phrase "standard variable rate" (or "variable rate" for that matter) to refer to a tracker rate if there is no reference rate or margin mentioned? What exactly is the rate supposed to "track"?

Non-tracker variable mortgage products have been commonplace in Ireland for decades - I really don't buy the argument that borrowers didn't understand how they worked. However, even if you're right, what margin over what reference rate would apply?

I'm really not trying to have a go - I"m genuinely at a loss to understand what argument you are trying to advance.

 

[Sophrosyne]

I think what todo is saying is clear.

Quite obviously unlike you, the language used in terms and conditions can be unintelligible to the uninitiated.

They go with the simpler flier or advertisement of the day.

Put yourself in their shoes.

 

[Sarenco]

They go with the simpler flier or advertisement of the day.

Fair enough but was there any conflict between the T&Cs and any flyer or advertisement?

 

[todo]

All I'm trying to say is that the banks have acted very cleverly.

They are not acting in the consumers best interest.

No matter what way you try to spin it, "Variable Rate" is an ambiguous term.

So in my view if a document says that a mortgage will revert to a variable rate and that document does not clearly define in a way that seeks to inform the consumer the definition of that variable rate. Then I believe the benefit of this ambiguity should fall on-behalf of the consumer.

Most people are not solicitors, doctors, bankers etc, banks have used clever terms and conditions to extract as much as possible from these people because they can.

 

[Sarenco]

No matter what way you try to spin it, "Variable Rate" is an ambiguous term.

I think we'll just have to agree to disagree on that point.

 

[peemac]

Fair enough but it was a generic advertisement rather than a recommendation that was tailored to address any particular customer's individual requirements.

I really can't agree that consumers, in general, would have been unaware of the difference between trackers and other variable rate loan products during that period. There are plenty of threads on this forum from that period on this topic and the Central Bank ran a high-profile TV advertising campaign - remember the guy on the bus?

In my opinion, it is simply not tenable to argue that anybody would have ever thought that a variable rate that made no mention of any margin over any reference rate actually referred to a tracker.

I remember the advert and it was very specific about tracker mortgage and it may have mentioned apr. It did not mention standard variable rate.

I looked back at some of the articles about interest rates at the time and again it was all about % over ecb and fixed rates and out of over a dozen general articles on interest rates, not one mention of "standard variable rate" was made in any guise.

The phrase simply was not in use in any advert nor in any news article at that time and therefore with the absence of a glossary, it cannot be assumed that someone would know that it was a very specific rate of the bank.

 

[Sarenco]

I remember the advert and it was very specific about tracker mortgage and it may have mentioned apr. It did not mention standard variable rate.

Are you saying the ad for the fixed rate products stated that a borrower would default to a tracker at the end of the fixed rate period? That's certainly relevant and if that's the case you could definitely argue that the terms of the product were misrepresented to you.

However, I really don't think you would ever convince a court that the parties understood a "standard variable rate" to refer to a tracker, in the absence of any mention of a reference rate or a margin over that rate in the contract. Banks were definitely continuing to offer traditional variable rate mortgages during that period.

 

[peemac]

Are you saying the ad for the fixed rate products stated that a borrower would default to a tracker at the end of the fixed rate period? That's certainly relevant and if that's the case you could definitely argue that the terms of the product were misrepresented to you.

However, I really don't think you would ever convince a court that the parties understood a "standard variable rate" to refer to a tracker, in the absence of any mention of a reference rate or a margin over that rate in the contract. Banks were definitely continuing to offer traditional variable rate mortgages during that period.

I reckon you need to have a full file to understand what the argument is.

I see where you are coming from, but its very simplistic view that ordinary punters should second guess what a bank means in their terminology.

Svr was not part of banking vocabulary at the time. The only "variable rate" mentioned was a variable rate that was a agreed percentage above the ecb refi rate.

So when a document states that the rate returns to the standard variable rate (no capitals, inverted commas or bold type) and when read with the mortgage document which states that the mortgage is a variable rate mortgage, then the lay person would think that the "standard variable rate" is that contracted in the main mortgage document, which was in effect the "standard variable rate" of IIB at the time as no other variable rate was generally available or offered or even discussed.

 

[Sarenco]

Ok, so you're not actually saying that there was any advertisement that suggested that a borrower would default to a tracker rate at the end of their fixed term but rather that, back in 2006, everybody (lenders and borrowers) would have understood a reference to a "standard variable rate" to be a reference to a tracker rate of some sort.

Is that the argument?

 

[peemac]

Ok, so you're not actually saying that there was any advertisement that suggested that a borrower would default to a tracker rate at the end of their fixed term but rather that, back in 2006, everybody (lenders and borrowers) would have understood a reference to a "standard variable rate" to be a reference to a tracker rate of some sort.

Is that the argument?

Where there is ambiguity, the argument falls in favour fo the consumer.

Everyome in bankign probably knew what a svr was no matter how it was written - even if it just said "svr", but the consumer at that time cannot be expeected to understand that it was a specific rate especially as it was not described in any glossary and that the only mention of a variable rate in documentation was when it was described as a variable rate at a % above the ecb rate.

It could be argued that as almost all variable mortgages at that time were variable rate mortgages that foollowed the ecb rate with a stated percentage added, then in terms of the consumer, this was the "standard" at the time.

Hence as the words "variable rate" is used in various forms, if the bank meant the "standard variable rate" had a specific meaning the bank should have at the very least provided a definition of what was meant by the rate (as they do now) or even capitised the words and put it in bold rather than just make it a casual part of the sentence.

You of course are looking from the bank point of view and a legalistic point of view, but thankfully, that way of thinking which the Ombudsman used just isn't washing with the central bank anymore.

 

[Sarenco]

Thanks.

Under the current phase of the review process, lenders are required to identify any customers who may have been impacted by:

• a lender's failure to honour a customer's contractual entitlements; or
  
• its failure to comply with the applicable regulatory disclosure requirements.
  

There is no proposal for the Central Bank to (re)interpret any contracts in a "non-legalistic" or informal manner.

As such, I would suggest that you might be better advised to focus your arguments on whether or not your lender breached any regulatory requirements regarding disclosure and transparency of information.

 

[peemac]

Home alone tonight, so had a look through documents.

Interesting to see the original offer document states that the mortgage is an Annuity Home Loan Variable Rate mortgage and the apr at time of offer was 2.95%

No mention of any other rate details except that it is subject to the special conditions - its in the special conditions that the rate will be 0.95% above refi rate.

So even in their own documents, the "standard" variable rate was the documented rate subject to any special conditions.

Remember, the fixed rate terms were "in addition" to terms and conditions already agreed.

Also, initial correspondence with iib when applying for the mortgage gave me three options to choose from - "3 year fixed, 5 year fixed or variable rate of 0.95% above ECB rate."

No other variable rate was offered - because the "standard variable rate" at that time was an agreed percentage above ecb.

IIB did not disclose that the company's "standard variable rate" was not the variable rate provided as the "standard variable rate" of the day as per mortgage offer, advertising and documents and was in fact a very specific rate that they did not publicise at the time, nor offered at the tine, nor gave a definition of at the time.

 

[DamC82]

Home alone tonight, so had a look through documents.

Interesting to see the original offer document states that the mortgage is an Annuity Home Loan Variable Rate mortgage and the apr at time of offer was 2.95%

No mention of any other rate details except that it is subject to the special conditions - its in the special conditions that the rate will be 0.95% above refi rate.

So even in their own documents, the "standard" variable rate was the documented rate subject to any special conditions.

Remember, the fixed rate terms were "in addition" to terms and conditions already agreed.

Also, initial correspondence with iib when applying for the mortgage gave me three options to choose from - "3 year fixed, 5 year fixed or variable rate of 0.95% above ECB rate."

No other variable rate was offered - because the "standard variable rate" at that time was an agreed percentage above ecb.

IIB did not disclose that the company's "standard variable rate" was not the variable rate provided as the "standard variable rate" of the day as per mortgage offer, advertising and documents and was in fact a very specific rate that they did not publicise at the time, nor offered at the tine, nor gave a definition of at the time.

What year did you take out the mortgage with IIB?
We first drew down in Jan 2007, fixed for 3 years.
We 'rolled off ' onto standard variable and as far as I was concerned at the time that was that.
The emergence of this flyer coupled with a work colleague informing me that he got his tracker at the end of a fixed term in 2009 from KBC has got me curious .
Is there anything specific in my paperwork I should be looking for?

 

[peemac]

What year did you take out the mortgage with IIB?
We first drew down in Jan 2007, fixed for 3 years.
We 'rolled off ' onto standard variable and as far as I was concerned at the time that was that.
The emergence of this flyer coupled with a work colleague informing me that he got his tracker at the end of a fixed term in 2009 from KBC has got me curious .
Is there anything specific in my paperwork I should be looking for?

Letter of offer Nov 2005, drawdown January 2006.

You would need to read all your paperwork especially the "special conditions" , "letter of offer" and any correspondence from IIB or broker.