PTSB Ombudsman rejects ptsb 3.25% prevailing rate complaint

Brendan Burgess

Brendan Burgess

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The full decision is here.


The borrowers had an offer an ECB +0.75% which they never signed.
But they wanted a slightly bigger mortgage so ptsb issued a new offer letter without the margin.
When the fixed rate was over they went on to ECB +3.25% - the then current ptsb tracker margin.

They claimed that they should have been given the 0.75% rate.
But the Ombudsman rejected their claim.

They also claimed that the margin of 3.25% was excessive. The Ombudsman rejected this.

From the digest of decisions:

[ptsb] submitted that the loan offer that was signed and accepted by Dan and Gwen, did not
contain a specific promise to a particular tracker rate. It further stated that the calculation of the
appropriate tracker rate margin of 3.25% was based on a commercial decision that the bank
was entitled to make.

...

The Ombudsman accepted that the bank applied the correct tracker interest rate margin
(ECB + 3.25%) to the mortgage loan account from July 2015 to redress the mortgage loan
account.


Brendan
 
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Here are the bits about the appropriateness of the 3.25% margin

The Complainants submit that the tracker interest rate of ECB + 3.25% that was restored to
their mortgage loan account by the Provider is “excessive”. They state that “The rate of
3.25% above the ECB rate that we have been given is ridiculous, tracker mortgages were
always in or around 1% above the ECB rate and for [the Provider] to state that this rate
would have been the rate at the end of our fixed term is crazy when as far as I can
remember they stopped offering tracker mortgages at the end of 2008.”

The Complainants wish to be put on a more “realistic rate”. They have queried the basis on
which the margin of ECB + 3.25% has been calculated as the Provider was no longer
offering tracker rates in March 2010. They assert that they have been given “a lower
variable rate mortgage and only slightly lower at that. It is not a tracker rate.”

[ptsb] details that “The applicable rate of interest which would have applied to the
Complainants’ mortgage on the expiry of the fixed term, if they had chosen to move to the
tracker rate in accordance with Special Condition 6, was ECB + 3.25%. Therefore, this is the
tracker rate which has been offered to the Complainants under the [redress programme].”

The Provider states that the Loan Offer, which was signed by the Complainants did not
contain a specific promise as to a particular tracker rate margin to be offered to them on
expiry of the fixed rate period:

“Based on the term and conditions of the mortgage entered into by the
Complainants, on the expiry of their fixed term, they did not have an entitlement to
be offered any specific margin over the ECB rate, but rather the appropriate tracker
margin rate being charged by the Bank at the time of the expiry of the 2 Year fixed
rate term.”

The Provider details that the calculation of the appropriate tracker rate margin is based on
a commercial decision made by the Provider, and is dependent on market conditions
taking into account a number of factors such as wholesale lending and borrowing rates,
interest rates paid on deposits and the Provider’s competitive position. It states that
therefore the appropriate tracker rate margin which would have been applied to the
Complainants’ mortgage in May 2010 was ECB + 3.25%. It submits that it is not correct to
say that tracker rates were always at around 1% and that this is the tracker rate which
ought to have applied to the Complainants’ mortgage.


The complaints for adjudication are:
...

(b) The Provider has incorrectly offered the Complainants a tracker interest rate of ECB +
3.25% which is excessive.

Ombudsman's decision

Special Condition 6 details as follows;

“On expiry of the fixed rate period and without affecting the entitlement of the
applicant to apply at any time to fix the rate for a further period (if available), the
interest rate applicable to the loan will be the then current [Provider] Tracker
Mortgage rate (comprising of a certain percentage over the European Central Bank
refinancing rate (“the ECB rate”)) appropriate to the loan as may be varied from
time to time in accordance with variations to the ECB rate. In the event of any
variation of the ECB rate, the revised interest rate for the loan will apply not later

Having regard to all of the evidence before me I do not accept that the Provider has failed
to apply the correct tracker interest rate margin to the Complainant’s mortgage loan
account. There is no evidence to demonstrate an entitlement to a tracker interest rate of
ECB + 0.75%. I accept that the Provider has applied the correct tracker interest rate margin
(ECB + 3.25%) to the Complainants’ mortgage loan account from July 2015 to redress the
Complainants’ mortgage loan account.
 
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Where does this leave the ptsb prevailing rate campaign?

The Ombudsman makes every decision on a case by case basis.

So while this does not create a precedent as such, anyone claiming that the 2.25% or 3.25% margin is unfair, would have to have advance some new and better argument.

Brendan
 
My gut feeling is that the Ombudsman is unlikely to be persuaded to change his mind on this issue.

Therefore the group should consider the court option. I am not recommending this as it's expensive and risky, but it should be considered. The possibility of a legal action is raised in this thread.

PTSB - ptsb prevailing rate cohort - possible legal action?

I'm with Anthony Joyce solicitors ..wai wait on word soon according to the last correspondence from them so fingers crossed ....
www.askaboutmoney.com

Brendan
 
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This is so disappointing.
I really hope we have better results in the courts .
 
Seems odd that the second/revised offer letter did not specify any tracker margin when the first one did. But also odd is the fact (I presume?) that the borrowers (and/or their broker if there was one) did not spot and query this omission.
 
It's not at all odd. Ptsb changed its terms and conditions in the meantime.

There was a broker and the broker should have told the client that this offer was not as good as the earlier one. But most brokers had no appreciation of the value of trackers at that time.

Brendan
 
The borrowers had an offer an ECB +0.75% which they never signed.

But they wanted a slightly bigger mortgage so ptsb issued a new offer letter without the margin.

When the fixed rate was over they went on to ECB +3.25% - the then current ptsb tracker margin.



They claimed that they should have been given the 0.75% rate.
Click to expand...
Issue letter stated ECB+3.25% which they signed, I just don't see the grounds for the complaint?

They also claimed that the margin of 3.25% was excessive. The Ombudsman rejected this.
Click to expand...

Again what are the grounds, because the don't like the rate?
I don't like my banks overdraft rate but if I want it I accept it.

Absolute rubbish case in my eyes and Brendan why should a case like this be heard in the courts?
 
Is it on expiry of discount period? Ie: the discounted margin was 0.75% then reverted to ecb + 2.25%
 
No, fixed initially and then went on to tracker but no rate was specified in contract so went on to the then prevailing rate.
 
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