Tracker mortgages continue to present problems according to Ombudsman

Compensation of €10,000 was paid to an individual after a lender failed to correct a customer’s credit profile, following a credit card being issued in the customer’s name without his knowledge or permission.

The case was one of 180 legally binding decisions, issued by the Financial Services and Pensions Ombudsman (FSPO) between January and May.

In another case compensation of €2,500 was awarded after a bank failed to provide an explanation for declining a transaction on a customer’s credit card and gave poor customer service.

Tracker mortgage issues again featured amongst the ombudsman's Ger Deering decisions.

In one case her directed a lender to write down 12% of the capital balance on a mortgage, backdated to 2010, following the failure to offer a customer the option to convert to a tracker interest rate mortgage loan in line with the bank’s contractual obligations.

The bank was also directed to repay the difference between the interest paid and what would have been paid on the reduced balance.

'While errors can occur, it is evident from some of the complaints we have received that such situations have been exacerbated by the failure of the providers to rectify the error.' Financial Services and Pensions Ombudsman Ger Deering.

He also awarded compensation of €22,000 due to particularly difficult circumstances suffered as a result of significant overcharging resulting from the denial of tracker mortgage interest rate.

Of the legally binding decisions issued between January and May, 2020, 72 were either fully, substantially or partially upheld and 127 were not upheld.

Other decisions included:

  • Compensation of €8,000 for overcharging where a tracker interest rate was not applied and a mortgage was restructured.
  • Compensation of €1,500 for failures in service and poor levels of communication from a bank arising from the freezing of a customer’s account following bankruptcy.
  • Compensation of €8,000 for poor communication regarding a no claims bonus and subsequent cancellation of a car insurance policy.
  • A direction to an insurer to amend its records to reflect the ending of an insurance policy as a voluntary cancellation, rather than a voided policy, to refund a €50 administration fee and to pay a sum of €250 in compensation for poor communication.
  • Compensation of €1,000 for poor communications relating to the automatic renewal of a car insurance policy.

Mr Deering highlighted the recurring issue of the reporting of credit profiles and particularly, circumstances where inaccurate or incorrect information has been added to a customer’s credit profile. 

“The incorrect reporting of a person’s credit profile can have serious implications, including the refusal of credit. While errors can occur, it is evident from some of the complaints we have received that such situations have been exacerbated by the failure of the providers to rectify the error."

"I would ask providers to be careful in their reporting and to remedy mistakes quickly. Consumers should also be aware that such reporting takes place, and inform themselves about what information is held about them on credit databases.”

"Increasingly, providers are applying my decisions to groups of customers who are in similar circumstances to those who have received decisions from the FSPO, even if they have not themselves made complaints to the FSPO," Mr Deering said.

"This is particularly evident from decisions I have made in a number of complaints relating to tracker mortgage complaints. It is my understanding that almost 7,000 customers across a number of banks will benefit from the directions I have made in a small number of decisions. There have also been other decisions that have caused providers to apply remedies or change practices to the benefit of a wider group of customers."