The Financial Services Authority (FSA) has said it has no plans to take action against Bank of Ireland over its decision to raise interest rates for 13,500 buy-to-let and residential customers.
In response to a letter from Andrew Tyrie, chairman of the treasury select committee, Martin Wheatley, FSA managing director, said it had reviewed the terms and conditions and did not believe the changes were unfair.
Last month, Bank of Ireland revealed it would be more than doubling the mortgage interest rates for thousands of UK customers on its tracker rate deals by triggering a “special condition” clause in its mortgage agreements that enabled it to increase the interest rate differential on some of its UK base rate tracker mortgages.
Wheatley said: “We currently have no plans to treat this as a prima facie case of mis-selling. We have reviewed the terms and conditions provided to us by the Bank of Ireland UK and did not identify any concerns which led us to believe the terms may be unfair.”
He added that while the mortgages impacted by the change were sold prior to FSA mortgage regulation, it had engaged with Bank of Ireland to “impress upon its senior management the need to ensure fair consumer outcomes”.
According to Wheatley, the bank volunteered to exclude customers where there is evidence suggesting that the customer could have been led to believe the differential was for the “life” or “lifetime” of the product.
However, the FSA said if customers believe they have grounds to complain then they should approach Bank of Ireland, or the mortgage broker or financial advisor that sold them the mortgage.
Tyrie has written back to Wheatley seeking additional answers. “We need more information to be confident that the regulator has thought carefully about this issue. It must exercise judgement to ensure that customers are being treated fairly.”
“Mr Wheatley’s letter appears to fall short on both counts,” added Tyrie.
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