The Financial Conduct Authority says it is concerned about the Bank of Ireland mortgage rate hike and is working with the lender to help consumers.
In a letter to Treasury select committee chair Andrew Tyrie, dated 20 May but only published today, FCA chief executive Martin Wheatley says all mortgages were sold prior to regulation in 2004 and are out of its jurisdiction but it continues to apply pressure.
On 1 May, the bank increased its tracker mortgage rate for 13,500 borrowers. The rate rose from Bank of England base rate plus 1.75 per cent to base rate plus 4.49 per cent for buy-to-let deals and base plus 2.49 per cent for residential.
Tyrie hit out at the initial FSA reaction when it said it did not have “any concerns” about the move in a letter to the TSC in March.
In the letter Wheatley says: “I would like to assure you that the FSA was concerned about this issue from a consumer protection perspective and that the FCA continues to work with the firm to ensure appropriate consumer outcomes.”
The letter was published the day before the BoI reversed its decision for 1,200 customers. The letter sets out the areas where FCA pressure led to changes in the bank’s stance over clarity of information or lack of mortgage conditions provided.
The FCA is currently considering a plea by hundreds of borrowers to assist them in a class action against the lender.
Wheatley said there is no evidence other banks have similar clauses but Tyrie insisted the FCA check there are no contracts containing such clauses.
Tyrie says: “It is clear that the regulator was concerned about the action taken by the Bank of Ireland. A small number of customers were belatedly granted a reprieve as a result of a review of their cases. Most were not.
“All of the mortgages were sold before 31 October 2004. As a result, the FCA has no jurisdiction over them. Its options for taking action were therefore severely limited. Furthermore, under current rules, it still has no jurisdiction over any mortgages covering buy-to-let properties.
“This is largely an issue for the FOS. The Treasury committee will look closely at its ruling.”