The Tracker Mortgage Review - The Story behind the Headline
What is a Tracker Mortgage & Have you been Impacted:
A tracker mortgage is a type of home loan where the interest charged on the loan tracks that of another publicly available interest rate, typically the rate set by the European Central Bank.
In 2015 the Central Bank of Ireland decided to carry out an industry-wide review of tracker mortgage accounts. Since 2010 they have been identifying and pursuing some lenders in relation to tracker related issues. These include borrowers who switched from their tracker rate and/or lost their right to revert to a tracker rate when they came to the end of a fixed-rate period on their mortgage. As such, in December 2015 they wrote to all lenders setting out the framework for the Tracker Mortgage Examination.
Scope of the Examination
The Examination requires all lenders to examine the extent to which they have been meeting their contractual obligations to customers. It also includes the transparency of their communications with customers in relation to tracker-related issues. The Examination covers all lenders who may have sold tracker mortgages in the past, including those no longer selling mortgages. It also covers mortgages that have been redeemed or switched to another lender.
Impacted customers
When a lender identifies an impacted customer it must firstly:
Stop charging the incorrect rate of interest on the customer’s account
Ensure that any further customer detriment is stopped as early as possible
Communicate this to the customer.
Lenders must then carry out a full review of the impacted customer’s mortgage account. Once this is complete lenders must issue a detailed letter to the customer explaining:
The exact nature of the error
The correct rate to apply to the customer’s account
Information on the next steps of the Examination, including the redress and compensation process where applicable.
There are 3 elements to any payment you will receive once investigation has been concluded:
A redress amount to cover the amount overpaid while on the incorrect rate, a refund of charges applied to your mortgage account and interest to compensate for you not having access to the money you overpaid on your mortgage.
A compensation amount to compensate for the Bank’s failure to charge the correct rate and the impact that this had on you *
A payment amount of €615 to cover your cost of obtaining independent professional advice that you may wish to seek on this matter.
*The compensation figure will be based on a % figure of the interest overcharge plus a % figure of the Time Value of Money – or an appropriate minimum amount, whichever is higher. This is a very subjective assessment and is likely to be an area where differences of opinion could arise as the full financial/personal impact of the failure of the Bank may not be fully understood by the Bank when making their assessment of this compensation figure. If you have lost your home/property and if your circumstances were impacted to the extent that you suffered personal and economic hardship as a consequence of the actions of the Bank in the treatment of your mortgage, then it is possible for you to seek a higher level of compensation under the Appeals process than you may have been awarded through the Bank’s own review process. It’s important that you can “evidence” this impact to support any appeal that you may decide to undertake. Independent Professional advice is something that should be considered by anybody choosing to pursue an appeal and any reasonable costs for this advice will be paid under the Appeals process. Any appeal will not impact on the redress and compensation amount already offered which can be accepted at time of offer. If you are unhappy with the outcome of the Appeals process you can then following the Legal process to support your claim for redress & compensation.
Timelines
The Examination is being conducted in phases and the Central Bank have set specific timelines for lenders to complete certain phases. Lenders have largely completed Phase 2, the review phase, by end September 2017 with two lenders submitting addendum reports in respect of further work they are undertaking. By end September 2017 lenders had contacted the majority of impacted customers. Some lenders have commenced contacting impacted customers regarding redress and compensation and the Central Bank expect all lenders to have commenced contacting customers identified as impacted, by the end of 2017.
If you have been impacted by the Tracker Mortgage issue don’t hesitate to make contact with the Firm for advice/guidance. We are experienced in handling Tracker Mortgage Appeals for clients. We are acting for a number of clients who were unhappy with the outcome of their Appeal and we are taking Legal action on their behalf to ensure fair treatment received based on the personal & financial impact experienced due to this failure by the Banks on this matter.
Contact Details: William Hanly, BDM Boylan Solicitors & Business Advisory
Email: whanly@bdmboylan.ie