Bank of Ireland’s mortgage tracker increase ‘may be illegal’
The Bank of Ireland may have acted illegally when it increased tracker mortgage rates for 13,500 borrowers by up to 122%.
Trackers are supposed to rise and fall in line with the Bank of England base rate, which has been at 0.5% since 2009.
But Bank of Ireland, which is the banking partner of the UK Post Office, invoked a clause in contracts that it says allows it to scrap tracking and raise rates when it wants.
Some landlords’ rates more than doubled. Rises are effective this month.
Justin Selig, of the Law Department, a London firm specialising in commercial and property litigation, is acting for 100 borrowers, according to the Mail on Sunday.
Rather than going direct to court, he wants to try other avenues such as the Financial Ombudsman Service and the Office of Fair Trading first.
Selig says there are several fronts on which the bank could be attacked, including alleged breaches of the Unfair Terms in Consumer Contracts Regulations, “placing this in the jurisdiction of the Office of Fair Trading”.
Today his office will submit a presentation to the OFT and the Financial Conduct Authority.
The FCA has already received complaints from MPs on this issue.
Selig is encouraging borrowers to complain to the FOS, even though there are doubts about whether the landlord loans are within its remit.
He says: “Most of the borrowers, even if they are landlords, should be protected.”
Bank of Ireland says: “This increase is permitted by a specific clause in these contracts.”