A COUPLE who claimed they suffered losses of more than €34,000 due to alleged “sharp practice” by Permanent TSB when they renegotiated interest rates on their €1 million mortgages have won a High Court order requiring the Financial Services Ombudsman to reconsider his rejection of their complaint.
Mr Justice John MacMenamin made the order over Permanent TSB’s failure to disclose to the ombudsman or couple a “highly relevant” transcript of a recorded phone conversation between it and Thomas Ryan on the renegotiation of interest rates.
Financial institutions must disclose all relevant documents concerning complaints against them, he ruled. He found the bank failed to act in good faith in its disclosure procedure, and he dismissed its “surprising” arguments that it had no such “good faith” duties.
He was ruling on an action by Thomas and Claire Ryan arising from their efforts in early 2009 to break out of “fixed-rate” interest terms on mortgages of more than €1 million on their family home in Wexford and a property in Dublin.
Mr Ryan said he had heard the bank was allowing mortgage holders to break out of fixed-term rates for a period without penalty.
After contacting a customer phone line in early 2009, he claimed he secured agreement on cheaper interest rates for a time and believed he could revert in the future to an earlier tracker rate.
The bank’s later insistence he could not revert to the tracker rate meant interest charges of €4,290 a month, rather than €2,090, from December 2009, he claimed, and accused the bank of “sharp practice and opportunism”. The issue was referred to the ombudsman, but neither the ombudsman nor the couple knew the bank had recorded the phone conversation and that a transcript of it informed the bank’s response to the complaint. In rejecting the complaint, the ombudsman found the couple were adequately warned of the consequences of changing to a variable rate during a fixed-rate term.
In his judgment, Mr Justice MacMenamin said clarity in any negotiations on mortgage conditions was essential. The ombudsman’s decision should be quashed due to two errors, he ruled.
The most “ fundamental” error was the bank’s failure to provide the transcript of the phone call with Mr Ryan, or, at the very least, notice of its existence. The second arose in a letter to the bank from an official in the ombudsman’s office seeking any documents “which the bank considers relevant” to the complaint. It was for the ombudsman, not the bank, to decide what material was relevant.
