Ulster Bank Tightened Challenge for Tracker Loan Compensation
Ulster Bank has stepped up its challenge to the decisions of the Financial Services and Pensions Ombudsman to include additional boom-era borrowers seeking compensation for tracker loans. There comes a time when the UK lender is trying to cut costs while pulling out of the market.
The bank, a unit of the NatWest Group, has initiated three proceedings in the High Court against the ombudsman Ger Deering in the past few months. Between 300 and 400 borrowers could be affected by any precedent set by the outcome of the challenges, according to Padraic Kissane, a Dublin-based financial advisor who has run a long reparation campaign for borrowers affected by the industry-wide tracker scandal .
All three cases relate to customers who had a variable home loan rate but took an option in the mid-2000s to switch to a tracker rate in conjunction with the European Central Bank’s (ECB) main interest rate after signing up with the so-called flexible mortgage transfer forms.
The transfer option was promoted by the bank to increase customer loyalty at a time of fierce competition in the home loan market.
Each of the borrowers subsequently switched to fixed rates for periods of time as the ECB raised rates. The bank’s key interest rate rose between December 2005 and July 2008 from 2.25 percent to 4.25 percent.
After the fixed terms had expired, however, the borrowers were paid variable interest again. The ombudsman decided in each case that the homeowners were entitled to return to a tracker tariff, as they were never advised that this right would be lost when they signed a fixed amount authorization transfer form.
Borrowers in this cohort were excluded from refunds and compensation in an industry-wide investigation under the supervision of the central bank between late 2015 and mid-2019, which resulted in more than 40,000 cases in the scandal.
The Irish Times reported on Ulster Bank’s first challenge in early July. According to court records, two more cases were then initiated by the lender. All three are due to be mentioned in the High Court next month.
Ulster Bank spokespersons and the ombudsman declined to comment on the cases.
Ulster Bank has admitted in the past few years that 5,500 of its customers were implicated in the industry-wide tracker scandal. This resulted in her receiving 335 million
The bank wants to avoid having to set up further provisions based on the decisions of the ombudsman at a point in time when it is calculating the costs of exiting the market. The bank is in talks to sell the majority of its nearly € 20 billion loan book to Permanent TSB and AIB.
Ulster Bank has topped the list of financial institutions held accountable by the Ombudsman for the past two years. The Watchdog’s annual complaint report shows that Mr Deering upheld 19 complaints against Ulster Bank – 13 in part, four in substance, and two in full.