Ulster Prime Time report on Ulster Bank customer who lost tracker

[Brendan Burgess]

http://www.rte.ie/player/ie/show/prime-time-30003251/10592559/

It starts at 27minutes 10 seconds


Summary of story (Prime Time allocated 8 minutes to it. In my opinion, it warranted a 60 minute documentary.)

April 2006 - Niamh took out a mortgage at ECB +0.85%
July 2006 - fixed for two years
July 2008 - Put on SVR on expiry of fixed rate. Argued persistently with UB but they doggedly refused.
May 2009 Switched to AIB
After all the publicity here & elsewhere, decided to have another go
9/2012 Made a formal complaint to Ulster Bank
10/2012 Complained to FSO after complaint rejected again by UB

It is really critical to understand at this point that Niamh had a standard contract and the Fixed Rate Agreement had a standard wording. The FSO already had upheld complaints from customers in these cases and instructed UB to reinstate their trackers. UB should not have contested this any further.

Instead of doing the right thing, they threw everything at the case. They claimed that Niamh hadn't complained at the time. They claimed that they had written to her offering her a tracker but that she had not responded to the email. They kept changing their story.

The FSO went down a huge number of irrelevant side tracks. For example, her mortgage should have defaulted to the tracker rate. So even if she did not respond to the alleged letter they sent her, they should have still put her on the tracker rate.

Two years after the initial complaint, the FSO gave his ruling.

12/2014 FSO upheld complaint

“In view of the discrepancies in terminology used by the Bank in the loan documentation the Complainant signed; the failure on the Bank's part to clearly inform the Complainant that once she entered into a fixed rate agreement its standard variable rate would operate as the default rate for the loan; and, the fact that the Fixed Rate Authority was framed in such away as to lead the signee to believe that the interest rate detailed in the original Offer of Advance would apply to the loan as a default rate at the end of the fixed rate term, I find that the original tracker rate should have applied to the Complainant's loan following expiry
of the fixed rate term in 2008 as the default rate, notwithstanding her failure to nominate an alternative interest rate (which, as detailed above remains a point of contention between theparties).In light of all of the foregoing, I am satisfied that the Bank erred when it failed to place the Complainant's mortgage account on a tracker rate of ECB + 0.85% (i.e. the original tracker rate) upon expiry of the fixed rate term on the 31 July 2008.”

He awarded €25,000 compensation but refused to order UB to give Niamh a tracker mortgage for the remaining term.

 

[Brendan Burgess]

So let's look at this decision by the FSO.

Niamh switched lenders because AIB offered her a rate lower than her SVR. Had UB not incorrectly taken the tracker from her, she would have been on ECB + 0.85%. She would not have switched.

This ruling by Bill Prasifka is entirely consistent with all the other rulings I have seen on this issue of people switching after losing their trackers. Here is his ruling in another case:

Two cases. In both, the only reasons the borrower switched was because they had lost their trackers and in both the FSO refused to reinstate their trackers.

It really boggles belief.

Ger Deering said on Prime Time, than in some cases they have ordered the reinstatement of trackers. I have never seen such an order.

He also said that compensation may suit the borrower better. That is a completely wrong argument. The FSO should always order the lender to reinstate the tracker. The lender can then offer the borrower a lump sum as an alternative to reinstatement. But the borrower would have the right to refuse the lump sum and insist on having their tracker restored.

 

[Brendan Burgess]

Niamh was outraged at the FSO's decision not to order Ulster Bank to give her back her tracker. So she got a copy of her file under the Data Protection Act.

In an internal email before the FSO's decision, the person handling the case in UB said:

So they know that they are in the wrong. They know that the FSO will find that UB were wrong in refusing to reinstate her tracker. They realise that rather than do the right thing, they can let the FSO make the decision as the compensation will probably be a lot less than the actual loss as the FSO doesn't "give an actual breakdown or rationale as to how the figure was calculated". They expect to get away with it for around €12,500.

After the FSO awarded Niamh €25,000, a further internal email said:

So UB already had plenty of these cases before the Ombudsman who had ruled that they must reinstate the tracker. So UB was conceding that these cases should be given back their tracker. All along, they knew that they had wronged Niamh, but they contested it all the way to the FSO anyway.

The email went on to say:

So they were contesting it, not because they thought that they would win it, but because the FSO's awards in these cases were very low and did not reflect the cost of reinstating the tracker.

So again, Ulster Bank is happy to say internally that the FSO hasn't a clue how to assess the loss from the loss of the tracker mortgages. So even at €25,000 they know that they have got away lightly.

"I understand that there is a risk that these kind of cases might become more prevalent and increase the cost exposure to the bank."

They know that these cases exist. And they are doing nothing proactively to find them and sort out the customer!

 

[Brendan Burgess]

Niamh's case featured in Harold Whelehan's Cold Case review of the FSO's decisions and he gave the FSO full marks:

I attach the relevant section.

Niamh also sent her file including the internal emails to the Central Bank and shortly afterwards Ulster Bank announced that they were facing an investigation by the Central Bank. It may well have been Niamh's case which triggered it.

 

[PJDCol]

I thought the case study in Prime Time was maybe not the best example as the lady had moved banks which brings all sorts of other legal issues into it. But again the lady was put into that situation of making of choice by Ulster Bank and the lack of power the FSA clearly holds. The emails of the bank celebrating that they got the cheaper compensation option would certainly make your blood boil.

Yes huge credit to all the guys involved.

 

[notabene]

The lady, (me!) moved after nearly a year because Ulster Bank gave her no other choice but to do so, it was the sensible financial choice, particularly given a changing work enviornment in 2009 and there was a large difference in rates, impending negative equity which means you can't switch. Ulster were asked many times prior to moving it to give the tracker back and it was like talking to the wall. A financial version of constructive dismissal if you will.

It does in ways make it more complicated, but is it? Ulster can easily take repossession of the mortgage - that isn't so complicated. I think that is a bit of a red herring to be honest. Where it is complicated is if you are trying to calculate an interest payment into the future.

There is another email where the bank says they would have returned the tracker if I had still been a customer, that was prior to adjudication, so they knew I was entitled to it back & yet fought the case.

 

[rodger]

Why didn't ombudsman order UB to pay the differential each month.

So you get there lump sum

And the difference between the variable rate and the tracker each month

Or an annual payment

It's not rocket science

 

[rodger]

That was you on the prime time?

Well done!

There was another similar story in today's Indo.

I hope the ombudsman revisits your case as part of the central bank review.

 

[notabene]

Yes it was, thank you! Fingers crossed for us all! Similar case in the indo, I would say there are a good few similar cases as there was quite a difference between rates at the time.

 

[notabene]

None of them entertained the idea of the differential, I did suggest that at one stage also, but it is another way of sorting it out certainly.

 

[PJDCol]

Yes well done on Prime Time!

I suppose we all just have to wait for the CB comments. My bank won't reply to my follow up calls, letters, emails on their original response that they are correct.

 

[notabene]

Thank you - not unusual I'm afraid - I've gotten replies but I've really pestered them, given them deadlines etc it's tiring and stressful work and they do that on purpose to try to dissuade you

 

[notabene]

Hi Brendan,

Well done it is not an easy one to summarise.

While the case started off as Breach of Contract I do wonder also for all the 'legal difficulties' which have been referred to I have been thinking of something that hasn't been mentioned is the consumer protection act 2007

It states:
'The Act provides that a range of unfair, misleading and aggressive trading practices are banned if they would be likely to cause appreciable impairment of the average consumer's ability to make an informed choice in relation to the product concerned and would cause the average consumer to make a decision about a transaction that they would not otherwise make. Practices are banned, therefore, if they meet two conditions' (citizens information, paragraph on unfair commercial practices)
[broken link removed]

And I wonder does that not apply to 'redeemed' (switched mortgages) as customers were forced into making a decision they would not have otherwise made - as I refer to it, 'financial constructive dismissal'(my own term, absolutely no legal precedence to it, but I feel it describes it accurately.)

Ulster made the process as difficult as they prossibly could, knowing they were incorrect. And as you said, the story kept changing both in relation to interest rates offered & communications to them, even when irrefutable evidence was presented they still tried to slide out of it, until more corroborating evidence was produced and they had to admit they were wrong. They also were unable to produce a document which they then managed to submit a year later. Is this sloppy or calculated? Who knows

Really, it's imperative that they are penalised for that sort of behaviour, it is very difficult to fight them & to keep fighting them and I can see why so many give up. I can also see why they fight all cases, they have a department to do it and are old hands at it. Remedies are also an issue because for the average customer to go to the high court, it just isn't possible

 

[Leighlinboy]

Hi Notabene
You spoke really well, found your case to be truly infuriating as did Ger Deering's lip service, I would have followed exact same path only im still in negative equity and stuck with my bank. The process is exhausting and intentionally so.

The fact that there is a central bank review going on barely got a mention, but in light of instances where bank clearly admitted culpability and still weren't forced to restore trackers, is there any point in it, if they hold their hands up and still get away with blue murder has there been any sea change in FSO or Central Bank
Governors position on these cases ?! The only person that would accept 25k settlement is someone crippled by 3/4 years of overpayment by 5/600 a month, can Ger Deering not see this ?

 

[rodger]

Timeline:

End of fixed rate, bank refuses to return tracker

You switch

UB admits they were wrong

In that case you should be returned to your original arrangement because you only switched because of their mistake.

UB won't willingly do it but ombudsman should force them.

I would focus on ombudsman.

What about European court / law?

 

[trasneoir]

Really, it's imperative that they are penalised for that sort of behaviour

For me this is the most bothersome aspect. What sort of precedent are we setting here? "Rob your customers and you might have to give some of it back".
By contrast, car manufacturers will think long and hard before gaming a US emissions test again.

 

[notabene]

For me this is the most bothersome aspect. What sort of precedent are we setting here? "Rob your customers and you might have to give some of it back".
By contrast, car manufacturers will think long and hard before gaming a US emissions test again.

I agree!

In cases where people have gotten trackers back, I understand as well the banks haven't had (have refused?!) to accept liability, it is mind boggling.

The banks did this, as they had made some bad business decisions - imagine if it had been a situation where I had bought for €300,000 - ended up with €150,000 of negative equity. I the said to the bank, well I'm not paying you back the negative equity, it was a bad business decision - imagine how they would hound me for that money and yet when it is them.....

 

[notabene]

Timeline:

End of fixed rate, bank refuses to return tracker

You switch

UB admits they were wrong

In that case you should be returned to your original arrangement because you only switched because of their mistake.

UB won't willingly do it but ombudsman should force them.

I would focus on ombudsman.

What about European court / law?

A few problems with that solution - I did visit the ombudsman to discuss such a resolution. The current decision is legally binding - you had 21 days ( not working days, 21 days) in which to appeal their decision to the high court. At the time I was absolutely worn out, but also a high court case is a minimum of €50-100k, double that if you lose and are awarded costs against you. At the time I had not done the data request so did not have the emails, so hard to know would I win so I decided there was too much cost.

After getting the emails at the end of last year, and hearing from the Ombudsman in February, that he can't change it, I did seek legal advice. They told me that the case is out of time (and apparently, Irish Law is very strict on this, and new evidence appearing does not change it) & that the court isn't the most fond of cases having been to the FSO first so they were saying I'd be mad to issue proceedings at that stage as the chances were very high that it would be thrown out

However, they did say, depending on how the review goes I could possible take a case then - hopefully that won't be necessary but......

 

[Brendan Burgess]

I did visit the ombudsman to discuss such a resolution.

Hi Niamh

Can you tell us a bit more about this? As I understand it, this decision was made under the previous Ombudsman Bill Prasifka.

Did Ger Deering have any comments on the decision?

Brendan

 

[notabene]

Hi Notabene
You spoke really well, found your case to be truly infuriating as did i Phillip Lanes lip service, I would have followed exact same path only im still in negative equity and stuck with my bank. The process is exhausting and intentionally so.
The fact that there is a central bank review going on barely got a mention, but in light of instances where bank clearly admitted culpability and still weren't forced to restore trackers, is there any point in it, if they hold their hands up and still get away with blue murder has there been any sea change in FSO or Central Bank
Governors position on these cases ?! The only person that would accept 25k settlement is someone crippled by 3/4 years of overpayment by 5/600 a month, can Phillip Lane not see this ?

Thank you very much.

Yes I'm definitely not the only one in that situation and I made sure to do it before I ended up in negative equity - I was conscious I'd be stuck if that happened.

It is very frustrating - I presume they are waiting to see what the outcome of the review is?