Ulster Bank Takes a Stand: Appeals Landmark Tracker Mortgage Ruling

“Ulster Bank to Appeal High Court Ruling on Tracker Mortgage Refunds, Potential Implications for Customers”
Ulster Bank Takes a Stand: Appeals Landmark Tracker Mortgage Ruling

Ulster Bank has announced its intention to appeal a recent High Court ruling that upheld the entitlement of two borrowers to tracker mortgage refunds and compensation. The decision could have wider implications for other tracker mortgage customers. The bank’s senior counsel, Marcus Dowling, informed the High Court that they would be seeking to appeal directly to the Supreme Court in a “leapfrog” appeal, bypassing the Court of Appeal. However, Dowling also requested that the High Court hear their application for leave to appeal to the Court of Appeal in case the Supreme Court does not opt for a “leapfrog” appeal. The bank and the Financial Services and Pensions Ombudsman (FSPO) may also agree on questions of law that meet the threshold for appeal. The hearing for these matters has been scheduled for later this month.

Last month, Ulster Bank’s appeals against the ombudsman’s findings that two borrowers were entitled to tracker mortgage refunds and compensation were dismissed by Ms Justice Marguerite Bolger. The bank failed to convince the court that the FSPO had made serious errors in his decisions. It is possible that the ombudsman’s binding decisions could be upheld based on the bank’s breach of contractual and consumer-protection obligations. Ulster Bank, which is part of the NatWest Group and is exiting the Irish market, has stated in its annual report that the outcome of these cases could have a materially adverse impact on the firm.

During the court hearing in October, counsel for Ulster Bank warned that the cases could potentially affect thousands of customers and have enormous financial consequences for the lender. The two borrowers who brought their cases to the FSPO were previously excluded from redress in the industry-wide examination conducted by the Central Bank between 2015 and 2019, which identified over 40,000 cases of overcharging across Irish lenders.

In one of the cases, the two borrowers had initially been offered a reduced interest rate for one year after taking out a mortgage in April 2004. They then reverted to Ulster Bank’s standard variable product. In 2006, they signed a flexible mortgage transfer form, entitling them to switch to a tracker loan. In May 2007, as European Central Bank rates were rising, they applied to fix their interest rates until August 2010. According to their loan documents, the bank could offer to extend the fixed period or provide alternative products. If these were not accepted, the borrowers would revert to the bank’s home loan rate. However, when the fixed-rate period ended, the bank refused to allow the borrowers to revert to their previous rate, as it had stopped offering it to new customers in 2008. The judge ruled that the bank had failed to explain that the tracker rate might not be available after the fixed-rate period, and therefore, the FSPO was justified in deciding that the borrowers’ contractual entitlement to the tracker rate continued.

Ulster Bank had initially appealed a third decision, but during the appeals hearing in October, it was agreed by both parties that this particular decision would be set aside. Ms Justice Bolger has now made orders to set aside the decision and has remitted the case back to the ombudsman for fresh consideration.