Ulster Bank intensifies challenge to tracker loan compensation

Bank’s three court cases against ombudsman may have implications for 400 borrowers

Ulster Bank has upped the ante in its challenge to Financial Services and Pensions Ombudsman decisions to include additional boom-era borrowers seeking tracker loan compensation. It comes at a time when the UK-owned lender is seeking to keep a lid on costs as it retreats from the market.

The bank, a unit of NatWest Group, has launched three High Court cases in recent months against the ombudsman, Ger Deering. Between 300 and 400 borrowers may be affected by any precedent set by the outcome of the challenges, according to Padraic Kissane, a Dublin-based financial adviser who has run a long campaign on redress for borrowers affected by the industry-wide tracker scandal.

All three cases relate to customers who were on variable home loan rates but took up an option in the mid-2000s to move to a tracker rate, linked to the main European Central Bank (ECB) rate, after signing up to so-called flexible mortgage transfer forms.

Transfer option

The transfer option was being pushed by the bank as a way of retaining customers at a time of heightened competition in the home loans market.


Each of the borrowers subsequently moved on to fixed rates for periods as the ECB was hiking rates. The institution’s key rate moved from 2.25 per cent to 4.25 per cent between December 2005 and July 2008.

However, when the fixed periods came to an end, the borrowers were put back on variable rates. The ombudsman decided in each case that the homeowners had an entitlement to return to a tracker rate, as they were never informed on signing a fixed rate authority transfer form that this right would be lost.

Borrowers in this cohort were excluded from refunds and compensation in an industry-wide examination overseen by the Central Bank between late 2015 and mid-2019, which resulted in more than 40,000 cases being affected by the scandal.

The Irish Times reported on the first Ulster Bank challenge in early July. Two further cases were subsequently launched by the lender, according to court filings. All three are due for mention in the High Court next month.

Spokeswomen for Ulster Bank and the ombudsman declined to comment on the cases.

Tracker scandal

Ulster Bank has admitted in recent years that 5,500 of its customers were caught up in the industry-wide tracker scandal. This led to it setting aside €335 million to deal with refunds, compensation, administrative costs and a €37.8 million Central Bank fine levied last March.

The bank is seeking to avoid having to set aside further provisions on foot of the ombudsman's decisions at a time when it is counting the cost of exiting the market. The bank is in talks to sell most of its almost €20 billion loan book to Permanent TSB and AIB.

Ulster Bank has topped the list over the past two years of financial institutions taken to task by the ombudsman. The watchdog’s annual complaints report shows Mr Deering upheld 19 complaints against Ulster Bank – 13 partially, four substantially and two fully.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times