Ulster Bank takes legal challenge over ombudsman tracker decision

Case could expose the bank to paying compensation to hundreds of other customers

Ulster Bank has mounted a High Court challenge against a Financial Services and Pensions Ombudsman (FSPO) decision that a borrower was wrongly denied a low-cost tracker mortgage, in a case that could expose the bank to paying compensation to hundreds of other customers.

The 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 potential fallout from the FSPO case, which comes as Ulster Bank seeks to exit the Irish market, may add to the overall cost.

The Irish Times has established that the case relates to a customer on a standard Ulster Bank mortgage who moved on to a tracker rate in the mid-2000s after signing up to a so-called flexible mortgage transfer. The transfer option was being pushed by the bank as a way of retaining customers at a time of fierce competition in the home loans market.


The borrower subsequently decided to move on to a fixed mortgage rate for a period, but was not allowed to return to a tracker afterwards. Ulster Bank stopped offering tracker rates in October 2008 and told the borrower that the original mortgage contract, rather than the flexible transfer form, applied.

It is understood that the FSPO, Ger Deering, issued a decision on the case last month, saying Ulster Bank should have offered the borrower the option to return to a tracker rate after the fixed period.

Ulster Bank filed its case on June 22nd. It is due to come before the court on July 19th. Spokeswomen for Ulster Bank and the FSPO declined to comment on the case.


The Central Bank ordered banks in late 2015 to go through files to find cases where borrowers were either wrongly denied a cheap mortgage that tracks the European Central Bank’s (ECB) main rate – or were put on the wrong rate entirely. It issued a final report on the scandal in July 2019, at a time when 40,100 affected borrowers were acknowledged by banks.

The focus has since shifted to the FSPO, who has been dealing with complaints from borrowers that were not satisfied by the outcome of the Central Bank-overseen examination. The Central Bank has repeatedly said that if the FSPO finds in favour of an individual that makes a complaint, the lender must apply this to other customers in the same category.

AIB was forced last year to announce that it was taking an additional €300 million provision to deal with tracker cases, after an FSPO decision on one complaint had a bearing on 5,900 customers.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times