Ulster Bank has announced its intention to appeal a recent ruling that could result in the lender having to compensate thousands of customers. The bank’s legal representative, Marcus Dowling SC, stated that an application would be made to appeal directly to the Supreme Court, bypassing the Court of Appeal. However, Dowling also requested that the High Court hear an application for leave to appeal to the Court of Appeal if the Supreme Court does not opt for a “leapfrog” appeal. The opposing party, the Financial Services and Pensions Ombudsman (FSPO), indicated that they would communicate with Ulster Bank regarding the matter. It is important to note that the FSPO will not be agreeing that any errors were made in its decisions.
Last month, Ulster Bank’s appeals against the ombudsman’s findings were dismissed by Ms Justice Marguerite Bolger. The ombudsman’s binding decisions could be upheld based on the argument that the bank’s conduct was in violation of its contractual and consumer-protection obligations. Ulster Bank, a subsidiary of the NatWest Group, has stated in its annual report that the outcome of these cases could have a significantly adverse impact on the company. Counsel for the bank warned that the cases could affect thousands of customers and result in enormous financial consequences for the lender.
The two borrowers who brought their cases to the FSPO were previously excluded from redress during the Central Bank’s industry-wide examination between 2015 and 2019. This examination identified over 40,000 cases of overcharging across Irish lenders. In one of the cases, the borrowers had initially taken out a mortgage in April 2004 with a reduced interest rate for one year. The rate then reverted to Ulster Bank’s standard variable product. In 2006, the borrowers signed a flexible mortgage transfer form that entitled 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. The loan documents stated that the bank may offer an extension to the fixed period or alternative available products. If these were not accepted, the borrowers would revert to the bank’s home loan rate. After the fixed-rate period ended, the borrowers attempted to revert to their previous rate, but the bank refused as it had stopped offering this rate 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. The FSPO determined that the borrowers’ contractual entitlement to the tracker rate continued at their election.
During the hearing of the appeals last October, it was agreed that one of the cases would be set aside. Ms Justice Bolger has now made orders to set aside this decision and has remitted the case back to the ombudsman for fresh consideration. A short hearing regarding Ulster Bank’s appeal is scheduled for later this month. The outcome of this appeal will have significant implications not only for the bank but also for thousands of customers who may be entitled to tracker mortgage refunds and compensation.