Ulster Ulster Bank takes legal challenge over ombudsman tracker decision

This is my understanding of the case.

1) The customer took out a mortgage before trackers were available so the contract did not have a tracker rate in it
2) They later signed a "Flexible Transfer Form" which transferred them to a tracker rate. (This was issued by Ulster Bank to stop customers switching to other lenders who offered trackers.)
3) They subsequently fixed their mortgage rate
4) When the fixed rate ended they were put back on the original non-tracker rate per their original mortgage contract.

The customer argued that the flexible mortgage transfer to a tracker rate permanently amended the contract and gave them a tracker for life.

Ulster Bank argued that the flexible mortgage transfer was voided by the move to a fixed rate.

The Ombudsman decided that the flexible mortgage transfer did amend the original contract.

Brendan
 
The wording on the Flexible Transfer Form was:

The rate of the Ulster Bank Flexible Mortgage Product tracks ECB rate with a margin which is fixed for the life of the Home Loan.

The Fixed Rate Authority Form says that on expiry of the Fixed Rate, the Home Loan rate shall apply in accordance with the Loan Offer.

These seem to me to be in conflict with each other.

Ulster Bank should have said on the FRAF that the Home Loan rate shall apply in accordance with the Loan Offer and you will lose your entitlement to a tracker.

I could make a case for either the borrower or the lender here. But they key thing is that for the Court to overturn the Ombudsman's decision, it's not enough for the court to disagree with the Ombudsman, the court must say that it was so obviously wrong, that the decision cannot stand.
 
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Brendan Burgess said:
For Ulster Bank to overturn this decision, they will have to show that the Ombudsman was egregiously wrong.

The wording on the Flexible Transfer Form was:

The rate of the Ulster Bank Flexible Mortgage Product tracks ECB rate with a margin which is fixed for the life of the Home Loan.
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Ulster Bank have stated to the Ombudsman that customers with this wording are impacted by ambiguous wording/clerical/administrative error. This applies to both people who originally took out a tracker mortgage and those who transferred.

They are extremely rigid in this statement across both impacted cohorts. I would guess that this is the tack they are taking.
 
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SaySomething said:
Ulster Bank have stated to the Ombudsman that customers with this wording are impacted by ambiguous wording/clerical/administrative error.
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I would agree that the wording is ambiguous.

But if it's ambiguous, it must be interpreted in favour of the customers.

It's not clerical error. Clerical error would be where someone at a low level says something in a one off letter to a customer. That can be excused. But if the form is badly written, don't blame the clerical staff.

Brendan
 
There must be a lot of customers affected by this. If it were just a few, Ulster Bank would just take it on the chin.

The fact that they are going to the High Court means that there must be hundreds impacted.

If they ran a campaign to stop people switching to other lenders by offering them trackers, they must have offered these to hundreds. And many of them would have subsequently fixed.

How will they price these mortgages when they sell them to permanent tsb? ptsb will not want to take over the court case and be arguing it in public and have a tracker case decided against them.

Brendan
 
It'll be interesting to read what their plea is and how the judge reaches their conclusion that's for sure!

The exact fixed rate authority wording was as follows:
"From the day following the expiry of any option selected above, the Ulster Bank Home Loan Rate shall apply in accordance with General Condition 2 of the Letter of Advance originally accepted by you being the Banks' General Conditions Relating to Advances by Ulster Bank Ireland Limited House Mortgages Section, which varies the Interest Rate, and the said General Conditions relating to the Advances shall be construed accordingly."
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That kind of clarifies why they are going to the High Court does it not?
 
SaySomething said:
That kind of clarifies why they are going to the High Court does it not?
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I see both sides in this case, but here is the hill that Ulster Bank must climb

McEvoy & Anor vs FSO and PTSB
3 May 2012

14. There are no unusual features about the case and it is one which can be described as a standard investigation into a standard complaint.

15. The applicable test for an appeal to this Court is that as set out by Finnegan P. in Ulster Bank v. Financial Services Ombudsman & Ors [2006] IEHC at p. 323, wherein Finnegan P. set out the relevant test:-

"To succeed on this appeal the plaintiff must establish as a matter of probability that taking the adjudicative process as a whole the decision reached was vitiated by a serious and significant error or a series of such errors. In applying the test the court would have regard to the degree of expertise and specialist knowledge of the defendant. The deferential standard is that applied by Keane C.J. in Orange v. the Director of Telecommunications Regulation & Anor and not that in the State (Keegan) v. Stardust Compensation Tribunal."

16. I accept the submission of counsel for the Financial Services Ombudsman that the test as enunciated by Finnegan P. in Ulster Bank can be broken down as follows:-
(i) The burden of proof is on the appellant.
(ii) The onus of proof is the civil standard.
(iii) The court should not consider complaints about process or merits in isolation but rather should consider the adjudicative process as a whole
(iv) In the light of the above principles the onus is on the appellant to show that the decision reached was vitiated by a serious and significant error or a series of such errors.
(v) In applying this test the court will adopt what is known as a deferential stance and must have regard to the degree of expertise and specialist knowledge of the Ombudsman.
17. It is not the function of this Court to place itself in the shoes of the Financial Services Ombudsman. As MacMenamin J. stated in Molloy v. Financial Services Ombudsman:

"I would re-emphasise the simple fact that it is not the function of the court to place itself in the shoes of the Financial Services Ombudsman. The jurisprudence militates against such a course of action. The test therefore is whether the decision was vitiated by a serious error or a series of such errors."

18. I do not consider that it would be appropriate for this Court to attempt to second guess the decision of the Financial Services Ombudsman on its merits.

19. The appellants do not satisfy me that taking the adjudicative process as a whole there was any serious or significant error or a series of such errors. I must have regard to the degree of expertise and specialist knowledge of the defendant and in these circumstances the appellants appeal
 
Based on the bare facts, I agree with the Ombudsman's decision.

But, for the sake of argument, let's say I disagree with him.

I couldn't say "that taking the adjudicative process as a whole the decision reached was vitiated by a serious and significant error or a series of such errors."

I have disagreed with the Ombudsman before but I would never have considered it a "serious and significant error".
 
Jeepers that is a very steep hill to climb.
Ulster Bank have quite the complement of legal staff on their tracker team. It'll be very interesting in 2 weeks time I think.
Will the judge be referring to the Central Bank sanctions do you think?
 
The judge will assess the case on its merits, the affidavits and the evidence given in the court and won't be distracted by anything outside the case.

Brendan
 
Brendan Burgess said:
How will they price these mortgages when they sell them to permanent tsb? ptsb will not want to take over the court case and be arguing it in public and have a tracker case decided against them.
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They won’t sell them to PTSB while the litigation is ongoing as this cohort of mortgages is unsaleable until matters are resolved.
 
It’s also worth bearing in mind that the High Court has not proven to be a happy place for financial institutions appealing decisions of the Ombudsman. For example, earlier this year Danske Bank had an unsuccessful outing in that court.

I’m not sure of the precedent value of the Danske case as it might apply to the Ulster Bank case as I haven’t seen the grounds of appeal of Ulster Bank, but as alluded to above, Ulster Bank will have to overcome the “Curial deference” obstacle, which is significant.
 
It is also worth bearing in mind the very wide latitude given by the Act to the Ombudsman

Section 12 (11) of the 2017 Act

(11) Subject to this Act, the Ombudsman, when dealing with a particular complaint, shall act in an informal manner and according to equity, good conscience and the substantial merits of the complaint without undue regard to technicality or legal form.

I don't know how far this goes. But for example, if the complainant in this case had gone to the High Court instead, the High Court could have reached a different decision to that of the Ombudsman.

The Ombudsman would probably reason as follow on the "substantial merits of the complaint"
1) The Tracker change form said it would be for the life of the mortgage
2) He thought he was fixing the rate for 3 years
3) A solicitor reading all three documents together might realise that he was giving up his tracker by fixing
But
4) that would be paying undue regard to technicality or legal form
 
Hi,

New here, self and hubby were pointed to this forum as Ulster mortgage holders and maybe a similar scenario.

It would be very interesting to see how this effects:

A) central bank given they closed tracker examination and fined Ulster. Will the examination be reopened? Will that fine increase?
B) what this also says about the central bank and the so called closure and level of assurance they completed on not impacted accounts, surely they opined on this?
C) what challenge the bank have, my read here is it seems very clear and there isn't much challenge
D) there is no way that this is a small issue and surely large numbers of customers must be effected by the same form and circumstances.

How can we and others determine if we have the same issue? Surely there is more substance in numbers of people with these issues coming forward.

Ulster no doubt will throw these mortgages to a vulture fund where they can shift them to close down.

Anyone any views?
 
Fortunately, it is not the role of the Central Bank to decide on these issues. That is the function of the Ombudsman and the Court.

The Central Bank persuaded the lenders to redress thousands of tracker customers. In some cases, the banks refused and the Central Bank can't go any further.

However, the Central Bank has insisted that whenever an Ombudsman or Court decision is relevant to other cases, it is to be applied to those. That is how 5,900 AIB customers got compensation despite probably no more than 100 even raising a complaint.

And in this particular case, there are two sides to the story. If I were in Ulster Bank's shoes, I would certainly have argued my case with the Central Bank and refused trackers to these people. But now that the Ombudsman has decided, I would accept his decision.

Brendan
 
Rhianthomas said:
How can we and others determine if we have the same issue?
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If seem fairly straightforward to me.

1) Did you sign a Flexible Transfer Form to move from a variable rate to a tracker rate?
If not, you are not affected by this.

2) If you signed a Flexible Transfer Form to move to a tracker, did you subsequently lose your tracker after coming off a fixed rate?

If so, you are affected by this.

If your neighbour has a tracker and you never had one but would like one and are a customer of Ulster Bank, that is not sufficient grounds.

Brendan
 
We believe we did.

We had a discount rate to start, move to a tracker and then fixed. We didn't get the tracker back but didn't complain or anything, kind of blissfully unaware and perhaps far too trusting.

Should we also go to the Ombudsman to let them know or will Ulster Bank contact us?

Really worried about them selling our loan at some point as well and losing rights or entitlements to these things. We aren't all that well informed but just want to pay our mortgage, own our home and not be mistreated
 
If by "we believe we did" you mean you believe you signed a Flexible Transfer Form, then you need to verify whether you did or not.

Write to Ulster Bank and ask them for a copy of the form you signed when moving to a tracker.

You don't really need to do anything else at this stage.
1) There will be a hearing in the High Court
2) If the High Court rejects the appeal, then the Central Bank will tell Ulster Bank to write to you

You should not worry about your loan being sold. All your rights, including any right you might have to redress for losing a tracker, will be retained.

If your loan is not in arrears, then it will probably be sold to permanent tsb if it's sold at all. If it is subject to to this issue, then it might be difficult for Ulster Bank to sell your loan to anyone until the High Court has ruled.

Brendan
 
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