On this basis I helped somebody to make a complaint to BoI and, not surprisingly, the Final Response letter just arrived rejecting the complaint.6. Variable Interest Rates
(a) Subject to clause 6(c), at all times when a variable interest rate applies to the Loan the interest rate chargeable will vary at the Lender’s discretion upwards or downwards...
1. Terms which have the object or effect of:
...
( j ) enabling the seller or supplier to alter the terms of the contract unilaterally without a valid reason which is specified in the contract;
...
( l ) providing for the price of goods to be determined at the time of delivery or allowing a seller of goods or supplier of services to increase their price without in both cases giving the consumer the corresponding right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded;
...
2. Scope of subparagraphs (g), (j) and (l)
...
( c ) Subparagraphs (g), (j) and (l) do not apply to;
Anybody with more legal knowledge than I have care to comment?— transactions in transferable securities, financial instruments and other products or services where the price is linked to fluctuations in a stock exchange quotation or index or a financial market rate that the seller or supplier does not control;
I don't see how it's restricted to such products. The legislation refers to "other products or services ... where the price is linked to fluctuations in ... a financial market rate that the seller or supplier does not control". Surely a mortgage would fit into that definition?The red section you highlight I think was purely intended to relate to index linked investments (UCITS and the like)
Sorry - I don't really see how this relates to the bits of the legislation that you highlighted. Maybe you can explain/clarify in more detail?This is a negative equity problem. The consumer is free to dissolve the contract - they can freely repay the loan. The consumer's problem is they can't refinance the loan or sell the house to cover the loan. That is a separate issue to the interest rate which is the term you're arguing over.
My understanding is that the Millar case was different. Their mortgage contract had something like "rate will vary depending on market conditions" or something like that. The BoI contract is much more to the point - "WE can unilaterally change the rate". There are absolutely no restrictions/qualifications.The Banks clearly have a valid reason - risk has increased & cost of funds have increased. If you want to argue those points then fine, but that's separate (and was this discussed in the Millars case).
I don't see how it's restricted to such products. The legislation refers to "other products or services ... where the price is linked to fluctuations in ... a financial market rate that the seller or supplier does not control". Surely a mortgage would fit into that definition?
It's not the Banks problem. It's the Borrower's problem.I don't see how/why it's the lender's problem that the customer cannot refinance/switch due to NE?
If you mean the problem is that the borrower cannot get out when the lender unilaterally changes the rate charged then surely that IS a "contract fairness" issue?
And I don't see where the legislation deals with that sort of scenario?
... why? What relevance do UK FSA guidelines have here?Let me explain and refer you to guidance from the FSA UK ( financial services authority ) in relation to unfair terms.
You mean the EU/Irish law on fairness in contracts or the UK FSA guidelines?It can be seen that the said clause falls foul of the unfair terms directive
What relevance does that have here?In the recent ECJ ruling Van Hove in 2014, the ECJ court
Again - yes - the question can be asked but what good does that do any individual borrower?Due to the particular lack of competition in Ireland, within the mortgage market, the question must also be asked are Irish consumers truly free to exit their respective mortgage contracts.
I understand your posts Sarenco. It's the argy bargey with the new posters that I do not understand, but if Clubman is progressing in his endeavour of understanding then so be it. I find it tedious, references to this and that UK law, eu directive, rather than actual cases that set the principle. More like theoretical far fetched theories, conjecture, hypothesis and possibility than reality.
This is basically what BoI said in their final response letter.A borrower can readily foresee the economic consequences that derive from a term that reserves to BOI a discretion a right to vary the rate of interest. Aside from anything else, a borrower would have received documentation containing the following warning in accordance with the Consumer Credit Act:
WARNING: (Variable rate loans) THE PAYMENT RATES ON THIS HOUSING LOAN MAY BE ADJUSTED BY THE LENDER FROM TIME TO TIME.
The economic consequences of such a loan term for a borrower really couldn't be made any clearer or more intelligible than that.
There is no requirement under the regulations implementing the Unfair Contract Terms Directive, the Consumer Credit Act or any other legislative provision for a lender to explain why it choses to exercise the discretion reserved to itself. In all the cases that you have referenced, the relevant contractual term that was considered unfair was found to be unclear or otherwise unintelligible to an average customer - that is simply not the case with a clause that simply reserves a discretion to a lender to vary the rate of interest charged during the term of the loan.
The reality is that few people - especially those under pressure with the mortgage due to clauses such as this and the high rates being charged by Irish lenders - can afford to take ANY sort of court action over this sort of thing.
The legal challenge should be taken to Bank of Ireland directly as a group.
The High Court can only hear appeals from decisions of the FSO on points of law - the Court will defer to the FSO on matters falling squarely within his jurisdiction.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?