Bank of Ireland increase differential on tracker rates

Inconsistencies
BOI have looked at mortgages pre Oct 2004, looked at the ‘Residential Mortgage Conditions 2001’ booklet and thought Kerching, let’s make money (by invoking this obscure clause).
But clearly BOI didn’t look very far.
Our B&W mortgage BTL offer dated April 2003 signed by mortgage specialist Tom P. makes no mention of any such booklet. It does refer to a leaflet, ‘you & your mortgage’
The B&W mortgage offers during this period seem to be inconsistent.
Was the 35 page booklet (RMC 2001) inappropriate for BTL’s, too expensive to send out, out of print or was it at the discretion individual ‘mortgage specialists’ to decide if it was to be included in the offers. Remember 10 years ago, demand for mortgages was so high, the banks struggled to keep up with demand.
It would be interesting what conditions other B&W customers have in their mortgage offer.
You can check your mortgage offer, under the section, ‘what you need to do’, ‘what you need to read’
If B&W didn’t think it was important to send us the RMC 2001 booklet, perhaps B&W just didn’t see this booklet as having any relevance or importance.

You might want to reference contractual interpretation used in law – Contra proferentem

See here:

http://en.wikipedia.org/wiki/Contra_proferentem

The Latin phrase “contra proferentem” is used to refer to a standard in contract law which states that if a clause in a contract appears to be ambiguous, it should be interpreted against the interests of the person who insisted that the clause be included. In other words, when people speak ambiguously in a contract, their words can literally be used against them. This is designed to discourage people from including ambiguous or vague wording in contracts because it would run against their interests.

See here:

http://www.wisegeek.org/what-does-contra-proferentem-mean.htm

Terry what you say rings true. My mortgage advance referred to the power contained within Section 4(10) Mortgage Conditions 2002 to increase the differential. When I asked BOI for a copy of my Mortgage Advance they sent me that and a copy of the Mortgage Conditions 2001…….which applies to residential mortgages(not BTL) and has no clause 4(10)….and which they said in a letter signed by them “was in use at that time”. So my Mortgage Advance referred to a document that was not provided and in any case referred to the wrong one. So how can borrowers make informed decisions if they are sent the wrong paperwork?

And another example from May 2011 about the shambolic way BOI conducts its regulatory diligence.

From The Irish Independent

By Charlie Weston Personal Finance Editor
Friday May 06 2011

BANK of Ireland has been forced to put more than 2,000 customers back on tracker mortgages and compensate them, the Irish Independent has learnt.

The homeowners had opted to move from trackers to fixed rates, but the bank had failed to observe Central Bank rules about the need to warn the customers of the cost implications of giving up a tracker.

Those who completed their fixed-rate period were put on to a variable interest rate — but they would have been very unlikely to change had they known the cost difference between a tracker and variable rate. Tracker mortgages are regarded as great value because they are set at very low levels and can only rise when the Europe Central Bank (ECB) raises its main rate”

How about warning us of the “cost implications” of remaining on a tracker rate they were planning to more than double?

Full story at http://www.moneybutler.ie/bank-forced-to-put-clients-back-on-tracker-mortgages/

@Gary,

Gary, You’re right. According to many borrowers, the BOI were offering financial incentives change lender before they hiked the rates.

They made no mention at that time to those borrowers regarding their intentions to hike the rate in future or i’m sure many borrowers would have changed lender.

As someone quoted in an earlier post – I was unable to make an “informed decision”

This article currently no.2 in the top 10 most read bbc reports this morning:-

http://www.bbc.co.uk/news/business-21720212

Keep the pressure up.

http://www.thisismoney.co.uk/money/mortgageshome/article-2291469/Post-Office-drawn-row-Bank-Ireland-hikes-mortgage-payments.html

When a financial institution makes an unprecedented financial decision against customer interests it should expect an unprecedented backlash.

This is now being borne out by the customer reactions to not only the BOI but those who have, until recently, entrusted their savings to the Post Office.

I just had a barrister freind who specialises in property send a brilliant letter with a really strong argument.

**MODERATED – POTENTIAL SOLICITING **

@Simon – sorry I’ve had to moderate your post I’m afraid. Please email the letter to me and I will file it in our image library and post a link to it. We are all here to help each other on a social basis, at least at this stage. My email address is [email protected]

I have received the same letter concerning my BTL mortgage (Bristol & West Jan 2004). The offer refers to 6(m) of the B&W residential Mortgage conditions, which we never recieved at the time as seems the case with many of the other comments (we were also not offered the incentive to change offered to some other commentators). I have a further query regarding whether this is a permanent change and what actions BOI would propose to take, or should take, when the base rate of the Bank of England eventually rises again, or when the circumstances which they state in their letter no longer apply (eg they have increased their capital reserves sufficiently). They do not address this in their letter and my reading of the conditions would be that the differential can only be increased while these conditions are valid, afterwards the differential should revert to the original contract. I would welcome others views on this?