EBS refuses switch claiming new Central Bank rules mean I must stay with BoI a year before switch

[Sarenco]

I wonder will the CCPC take an interest in this development?

I can't see how the length of time that a borrower/applicant has had a mortgage with another provider has anything to do with a lender's underwriting process - it looks like a blatant attempt to restrict competition to me.

I would also query whether EBS have breached the transparency requirements of Central Bank's CPC, as amended with effect from the start of this year to facilitate mortgage switching.

 

[RedOnion]

I can't see how the length of time that a borrower/applicant has had a mortgage with another provider has anything to do with a lender's underwriting process

There is one aaspect that's an underwriting concern. Typically when someone switches, they end up missing a payment. This could be because the new mortgage is for a little more than needed to redeem the old one, or just due to timing the first payment due in the new one is a month later. For credit risk they like to see 12 consecutive months of repayments.

There's a poster who was refused a home improvement loan from KBC because they had switched mortgage less than 6 months previously: https://www.askaboutmoney.com/threads/avantcard-personal-loan.212104/

I would also query whether EBS have breached the transparency requirements

Looking at the wording changes, what part do you think they may have breached?
Granted, this might not be in the spirit of what CBI intended by the measures, but I can't see anything in the wording that they've gone against.
It would be very difficult for CBI to force any regulated entity to have more flexible underwriting criteria.

 

[Sarenco]

Typically when someone switches, they end up missing a payment. This could be because the new mortgage is for a little more than needed to redeem the old one, or just due to timing the first payment due in the new one is a month later.

Maybe I have misunderstood the point but surely the new lender would simply adjust the payment date so that the first payment isn't missed, no? In any event, wouldn't this issue equally arise with a borrower with a 12-month payment history?

Looking at the wording changes, what part do you think they may have breached?

Well, the CPC requires a lender to publish information on the switching process it has in place. It seems to me that EBS omitted to publish a key new condition to their switching process and the CBI might consider that a breach of the CPC. It certainly seems to offend against the general principle that a regulated entity should makes full disclosure of all relevant material information in a way that seeks to inform a customer.

 

[RedOnion]

surely the new lender would simply adjust the payment date so that the first payment isn't missed, no?

I've explained it poorly. The customer doesn't go into arrears or anything, but the first payment due date gets set up in the following month, so there might be 2 months between last date with previous lender and first payment with new one. So there are only 11 payments in 12 months.

It seems to me that EBS omitted to publish a key new condition to their switching process

It appears that all the banks have conditions that aren't published, so they're all falling foul by that measure. I haven't noticed any lender including minimum terms in their switching guides. But just a general 'lending criteria, terms and conditions apply' type statement...
It's an interesting point.

 

[Sarenco]

The customer doesn't go into arrears or anything, but the first payment due date gets set up in the following month, so there might be 2 months between last date with previous lender and first payment with new one.

Maybe I'm being dense but if the customer doesn't go into arrears and neither the old nor the new lender is out of pocket, how does this impact the underwriting process?

This obviously wasn't considered much of an issue until very recently, which is why I think this really has more to do with preventing switches/restricting competition.

 

[Brendan Burgess]

I can't see how the length of time that a borrower/applicant has had a mortgage with another provider has anything to do with a lender's underwriting process - it looks like a blatant attempt to restrict competition to me.

It's not an risk or underwriting issue.

If I were a lender giving cash back I would not take on a new customer who has shown a willingness to switch.



Brendan

 

[MrEarl]

Hello,

The Banks have elected to offer cashback deals, so need to accept the risk of doing this.

Why not offer a cheaper lending rate, where those loyal customers who keep their mortgages with the lender for longer periods, benefit more ? It's simple, but yet quite a few of the Banks rather try and entice customers in with short term cashback incentives (and higher lending rates), then we see EBS cry foul when someone appears to be availing of the opportunity presented to them in a semi-competitive marketplace.

Attempting to mislead a customer is very wrong, and needs to be punished. Regardless of the outcome of the complaint, I would take the final response letter and then submit a complaint to the Ombudsman, as a matter of principal.

 

[renter45]

It's not an risk or underwriting issue.

If I were a lender giving cash back I would not take on a new customer who has shown a willingness to switch.



Brendan

Consumer watchdog would have a field day if above statement was true. Fines galore.
Anyone know the deadlines for banks to deal with complaints? I got a written response stating they are looking into complaint but no correspodance in the last 2 weeks.