Key Post "I wasn't offered a tracker, although trackers were available..."

Brendan Burgess

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This has come up a few times so I think it would be useful to clarify the issue.

You are not entitled to a tracker unless
  • Your mortgage contract or letter of offer said you would be on a tracker either immediately or at the end of a fixed rate agreement
  • Although your contract does not mention tracker, you later switched to a tracker
  • Although your contract does not mention a tracker, you fixed the interest rate and the Fixed Rate Agreement said you would be offered a tracker at the end of that fixed rate period
This thread is not about these cases. It's about people where the contract or Fixed Rate Agreement never mentioned a tracker.


I took out an SVR mortgage with AIB in 2006.
The contract says nothing about a tracker.
I didn't fix.
But should they not have offered me a tracker as it was obviously a much better product.

No, you have no entitlement to a tracker. You could have asked for one at the time, but the most people had no idea what a tracker was and what its benefits might be in the future.

I asked for a tracker, and they refused me although they were on offer to other customers?
Well then you could have gone to another lender and taken out a tracker with them.

But wasn't the bank supposed to "act in the best interests of the customer" under the Consumer Protection Code?

Here are the relevant sections from the CPC
"A regulated entity must ensure that in all its dealings with customers ... it:

2.1 acts honestly, fairly and professionally in the best interests of its customers
and the integrity of the market;

2.2 acts with due skill, care and diligence in the best interests of its customers"

This is a strange sort of wording. If taken literally, AIB might have to tell its customers to go down the road to Bank of Ireland where there is a better deal.

It doesn't mean that it has to offer you a tracker.

But doesn't a lender have to tell you about all the products it has available? They never told me that they had trackers available.

No, it doesn't.
 
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Brendan Burgess

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Should my mortgage broker not have mentioned a tracker to me?

Back in 2006 and 2007, there was a general lack of appreciation of the value of trackers.

Many brokers and journalists were advising people to fix their rates so the discussion was between fixed and variable, not between SVR and tracker.It is somewhat surprising that brokers seem to have been left out of the Central Bank review.

I would guess that some customers might have had a case to make,but they would find it very hard to progress now.


But KBC wrote to brokers saying that all customers would go onto trackers after the fixed rate ended.

This is discussed at length in this thread:
KBC told brokers" all fixed rate loans will roll onto trackers on expiry"

Some people think that this gives them a right to a tracker, but it's unlikely that they will succeed.

Update 2018: Some of these people have now been deemed impacted and have been put on trackers from the time their fixed rate ended.

My contract with KBC says that I will be put on the "prevailing variable rate" on expiry of the fixed rate. But KBC had no SVR at the time, only tracker rates, so I assumed that the prevailing variable rate would be a tracker.

Again, it's unlikely that this argument would succeed but it's worth a try. It's the type of case worth bringing to the Ombudsman because it's free, but I wouldn't risk the cost of a court case.
 
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grock1982

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63
Brendan,
I would like to get your opinion on our case with kbc, thanks.

When we fixed our mortgage in mid 2008 the bank sent a change of rate notification letter to our solicitor, which inadvertently referred to our fixed rate as a tracker rate.
Under the consumer protection code, particularly sections 4.1 4.4 and 4.5, all information must be clear, accurate and concise. The method of presentation must not disguise, diminish or obscure important information.
Sections 6.6 and 6.7 deal specifically with any change in interest rate notification to a customer. Considering that kbc referred to our fixed rate as a tracker, I believe that we are entitled to it. Particularly when section 6.7 deals with tracker interest rates, kbc met all of the criteria outlined in the code which complies with a tracker product change of rate notification letter. If kbc dispute the tracker then they are in breach of the consumer protection code.

We have been included as part of the review.
 

Brendan Burgess

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Folks, this is supposed to answer a general question and summarise the content elsewhere.

It is not for a rehash of the issues discussed in other threads.

If you have another example of where someone had no mention of a tracker, but has a case for getting one anyway, by all means post a reply.

Brendan
 

Editiono

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86
@Brendan Burgess great post..... however there are some grey areas...what if your fixed rate contract did not state a default to rate but did have the following statement on the loan acceptance signature page "I/We fully understand that any outstanding debt owing now or in the future to Ulster bank Ireland Ltd by us at any given time is secured on the Property the subject of the Tracker Mortgage and must be repaid in full before the relevant deeds can be returned or the relevant mortgage deed releases"

Our Fixed rate loan offer had not default to rate but after the fixed was up, we got a letter to as As per your contract, as your fixed rate has expired, we have moved you onto a SVR" Did not state that anywhere in our contract so not sure what side of the line I am on
 

Brendan Burgess

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Hi grock

You never had a tracker.
You never asked for a tracker.
You got a letter containing an error.
You never made any decision based on this.

But you claim entitlement to a tracker anyway?

You have not lost out. You should not get a tracker.

Brendan
 

Brendan Burgess

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Hi Edition

Very similar to grock's case.

A typo in a letter does not entitle you to a tracker, to which you had no entitlement anyway.

Brendan
 

Lightening

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319
Brendan to Grock1982

I disagree that Grock 1982 never had a tracker. If Grock drew down his loan before the trackers were pulled in KBC at a time when there was no Standard Variable Rate and his fixed rate contains the wording "prevailing variable rate" he has a case. (I think you mentioned this yourself in a past post) Not sure when KBC commenced using the term Home Loan Variable Rate, or Standard Variable Rate in their fixed rate contracts! But Grock1982 doesn't have that!

Furthermore the letter was not an error but a rate change confirmation referencing the tracker before drawdown. (He should have rolled to tracker) KBC have confirmed he's in the review. Some are not included in the review.

He is not the only one that I have heard got one of these letters confirming the fixed rate but referencing the "prevailing variable rate"to the tracker.

This backs up the communication sent to brokers that all fixed will roll to tracker.
 

grock1982

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63
In relation to the central bank tracker review, the consumer protection code 2006 forms part of the framework.
There is a section in the code that refers to advertising and a regulated entities responsibilities. It is worth having a read of it, particularly in reference to the flyer\advertisement that iib sent to brokers.
 

Lightening

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@ Grock1982 As far as I am aware you would be one of the cohorts that Padraic Kissane has on his list. I suggest you contact him to discuss.
 

Brendan Burgess

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If Grock drew down his loan before the trackers were pulled in KBC at a time when there was no Standard Variable Rate and his fixed rate contains the wording "prevailing variable rate" he has a case.
Thanks for reminding me of this scenario Lightening. I have amended the second post to capture this.

My contract with KBC says that I will be put on the "prevailing variable rate" on expiry of the fixed rate. But KBC had no SVR at the time, only tracker rates, so I assumed that the prevailing variable rate would be a tracker.

Again, it's unlikely that this argument would succeed but it's worth a try. It's the type of case worth bringing to the Ombudsman because it's free, but I wouldn't risk the cost of a court case.
 

Lightening

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319
Thanks Brendan!
In the heading "KBC all fixed will roll to tracker..." you state

"If KBC had vague wording in their Fixed Rate Agreement, then I think that the vague wording in this would certainly lead a borrower to have a legitimate expectation that they were going to be put on a tracker at a specific margin.

If the Fixed Rate Agreement was clear, then this flyer won't help very much.

If the Fixed Rate Agreement or original mortgage said "prevailing rate", then I think that the borrowers can claim the 1.25% and 1.4% rates with some justification.

If the broker says that he sold the KBC mortgage because of this flyer, then it would also help.

Brendan

I am wondering if Grock1982 could give the exact wording of the rate change letter?
 

Sean A

Registered User
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19
Hi Brendan.

What is your basis for saying that these exmaples are not entitled to a tracker?

Are you aware of any particular case were a person has be successfully put onto a tracket in this scenerio?

Bit in the dark as to my situation. Few friends in several banks saying that the banks are looking into these situations.
 

Brendan Burgess

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The Governor of the Central Bank was asked about this at recent meeting with the Oireachtas Finance Committee

Senator Rose Conway-Walsh: I am referring to those people who went into a bank to get a mortgage at the time that tracker mortgages were available but were not told about the tracker mortgage rate or were not offered such a mortgage. Is there any case for those people who were not on a fixed rate but were requesting a new mortgage?

Professor Philip Lane: Over the whole tracker mortgage period, from the early 2000s onwards, clearly there were waves where individual banks might have been pushing certain products. Competition was pretty intense in the mortgage market in the mid-2000s. There is a lot of volatility in this area. A bank might offer a product for a while and might then become overexposed in respect of a certain type of loan and pull back, at which point other lenders come in. Those are the market dynamics of the credit market. One cannot say, therefore, that all lenders can have a fixed set of products that they offer at all times.

Senator Rose Conway-Walsh: When the Central Bank was examining the tracker mortgage situation, did it examine the cases of the new people who took out mortgages at the time in question to determine whether enough information was made available to them and whether there was enough transparency? On the basis of the Central Bank's consumer protection role, do our guests believe that those customers were given the best product? Was this considered?

Mr. Ed Sibley: There will be different circumstances for different borrowers. One can see that in the market today. Some borrowers will value a fixed-rate product for three to five years.

Senator Rose Conway-Walsh: I understand that.

Mr. Ed Sibley: That is perhaps based on their own judgment on the certainty of cost and their view on where interest rates might go. This trend would have been prevalent in the system before the crisis. What we are seeing - Ms Rowland can add to this - is that there was a lack of transparency. There was ambiguity in the contracts that were being used at the time. That has led to many of these issues. We have pushed, through consumer protection work since 2008, to ensure better transparency and less contract ambiguity in order that what is being taken on by the consumer is clearer.

Senator Rose Conway-Walsh: Can the delegates say conclusively that anyone who took out a new mortgage when tracker mortgages were available is not entitled to be included in the compensation arrangement?

Professor Philip Lane: Is the Senator referring to people who know now what they would have got with a tracker at the time in question?

Senator Rose Conway-Walsh: Yes.

Professor Philip Lane: That category would not be included. We are examining the handling of those who had a tracker mortgage or the right to one, not the wider group. It is an interesting question to think about. One must consider how regulators' work evolves. What we are saying now is that while we are all the time trying to reinforce the code in terms of transparency and so on, we now have what is called a consumer risk-assessment model whereby, essentially to cover what the Senator is talking about, our plan is to be much more pre-emptive and in the moment in terms of what is going on. It is a matter of determining whether any new product makes sense and the hidden problems in any new product that might be offered. The goal is to be a lot more pre-emptive and catch problems before they materialise. Perhaps Ms Rowland can reinforce that.

Ms Derville Rowland: If I understand the Senator's question correctly, it is about whether everybody who had a mortgage and for whom a tracker mortgage would have been a better product at the time should be in the scope of the examination.

Senator Rose Conway-Walsh: Exactly.

Ms Derville Rowland: That is beyond the scope of this examination. The examination is confined to the 2 million accounts. That is where the starting point was. I refer to where the customer might have started on a tracker product or had an interest rate applied to it at any stage, or had an entitlement, or may have had an expectation of an entitlement, through the process they engaged in. It does not go as far as to cover what the Senator referred to. I do not believe it could. I do not know whether Mr. Sibley wants to add to that.

Mr. Ed Sibley: In the market today, a customer can choose to take out a mortgage on a fixed rate for five years or to be on a variable rate. Who knows what the circumstances will be in three to four years? Interest rates might go up, in which case it will benefit the person who has chosen the fixed rate as opposed to the person with the variable rate. Alternatively, interest rates might go down. There is a degree of choice in that regard. As long as it is informed and transparent, it is not an issue.
 

Peter01

New Member
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1
Hi Brendan i took out a mortgage in 2006 with a broker i was told that i was going to be on a tracker morgage but when i signed it had variable on it.
The broker told me it wouldnt make much diffrence but it obvously it did is there any redress in this ?i have checked my contract and it is variable i remender signing documents with tracker on it but never taught anything of it,i was advised by family at the time to go with tracker was glad to get mortgage at the time so didnt pursue.
Thanks in advance.
Peter
 

Brendan Burgess

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when i signed it had variable on it.
i remender signing documents with tracker on it
Are these two statements not contradictory?

If you signed an application which had variable on it, then you were not applying for a tracker mortgage.

What you signed usually overrides everything else.

The time to pursue it was at the time. If the lender refused you a tracker, you could have gone to a different lender as trackers were widely available at the time.

Brendan
 

Gr33n131

New Member
Messages
4
In 2008, when I drew down my mortgage with AIB I was told that tracker was unavailable to me, yet I have sure 3.3 in my letter of offer ,and did receive the €1615....
In any of the docs received from AIB however I have no proof of this... I was made feel i was lucky to be getting to draw a mortgage at all, and that the rate they were giving me was best on offer....negotiations and application march- july 2008, draw down 1st sept 2008, on fixed, paid 8k in Jan 2009 to break out after realising MASSIVE mistake, AIB informed no other way around reverting to variable other than breakage costs, and NEVER offered a tracker.
I definitely enquired on many occasions 're getting tracker in summer 2008, pre drawdown, as friends taking mortgages at the time said it was crazy not getting tracker, they all began on trackers, and we wrre aware of their value....with varying banks. I tried, was refused and drew down believing I was being given best deal at that time for me. AIB advising me as a single applicant a fixed term was most reassuring .... not sure how I can prove this however.... obviously I have all the breakage costs letters etc but no proof of me.requesting tracker before drawdown....
 

jmcc35

New Member
Messages
4
Hi Brendan. I took out a mortgage with AIB in May 2006. No mention of tracker. I was on interet only for 1st year. Letter of offer stated "You will be advised of your interst rate options before 18/05/2007 and interest instruction will be required prior to that date". I was never advised of my options. In January 2008 i went on fixed again for 2 years. On the completion of this 2 year period i was advised of my interest rate options. Should the bank have advised me of my interest rate options prior to 18/05/2007. If so should they have advised me that a tracker was an option? Thanks.
 

Gr33n131

New Member
Messages
4
Brendan I'd love ur opinion on my outlined case above... received the generic response from.aib today, and am ready to reply.... am I waiting my time...... would love an opinion/ advice
 
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