Can a bank force you to use their current account to service their mortgage?

M

murphaph

Registered User
Messages
1,136
This has cropped up elsewhere without a definitive answer. Say you take out a mortgage with Bank A and with it open a current account also with Bank A to service the mortgage. Let's say then that Bank A introduces hefty fees on same current account so you'd like to switch to Bank B which is free. Can bank A (legally) contractually hold you to using their current account to service the mortgage? What's to stop them introducing a special punitive transaction charge for their own mortgages, say €10 per DD? (you get the idea)

Is there any recourse to the ombudsman if a bank does this (holds you to their account, that is)?
 
In general, the mortgage lender cannot force you to bank with them.

Presumably, it could be in the mortgage contract, that you must bank with them, but I don't think that any Irish mortgage contract contains this clause.

Some , e.g. Ulster Bank give a discount on their mortgage rate to people who keep their current account with them.
Is there any recourse to the ombudsman if a bank does this (holds you to their account, that is)?
Click to expand...

How can the bank do this? There is nothing to stop you from opening a bank account with Bank B. You can change all your automated transactions to Bank B.

if the bank has written to you telling you that you must use Bank Account A, then they presumably must explain why you are obliged to do so.
 
I haven't (yet) instructed my bank (UB in this case) to switch yet because I need to open a BoI account first. I'll do that when I'm home in a couple of weeks and can visit a branch. I'm just wondering can UB force me to use their account into the future.

I took out a switcher mortgage with UB when trackers became available. I declined the better interest rate for using their (non-free) U-First account because I saved less than the fees, so I don't believe I have any contractual obligation to them to continue using their standard current account (which will soon attract fees of €4 that I want to avoid for the sake of 2 or 3 transactions per month on the account).

I have asked UB in writing how I change the DD instruction, just waiting to hear back from them now. Will keep the thread updated with their response.
 
Danske require you to have a current account with them and it's the only account that they will accept mortgage payments from.

It's in the loan agreement that you must keep this account open while you have the mortgage.

Saying that, if you open a Prestige account with them for €120 annual flat fee they'll give you a 0.45% discount on your interest rate.
 
Hello,

There are a couple of conversations going on at the moment about this - particularly, with regards to Danske Bank (previously NIB).

The link below takes you to the conversation about Danske & their Current Account - it seems people can either pay for a Current Account with them & avail of discounts, such as the Prestige A/c which I also have (and like) ... or perhaps avail of a free basic account, simply to "feed" the mortgage, from what I can gather.

http://www.askaboutmoney.com/showthread.php?p=1329836&posted=1#post1329836

I would imagine the "feeder" account, if no changes apply, may be permitted by the regulator, while Bank's imposing additional fees and seeking to force another financial product on you, may well be in breach of current regulatory requirements.

Regards

Mr. Earl.
 
MrEarl said:
I would imagine the "feeder" account, if no changes apply, may be permitted by the regulator, while Bank's imposing additional fees and seeking to force another financial product on you, may well be in breach of current regulatory requirements.
Click to expand...

Yap, that is my recall of the regulations as well and it does not in any way prevent you from making SEPA payments into to, so no issues there either.
 
Will be interesting to see the bank's response. I will have to accept the feeder solution if offered by the sounds of it, though my preference would be to give them an IBAN from my German bank and pull the direct debit from there, rather than me HF having to ensure I make the correct standing order to the feeder.
 
You must log in or register to reply here.
Back
Top