The Financial Conduct Authority is considering a plea by hundreds of Bank of Ireland borrowers to help them seek redress after being hit with an increase to mortgage rates in May.
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.
From 1 October, it will rise again for residential borrowers to base plus 3.99 per cent. The bank says it is due to higher capital requirements.
In March, FCA chief executive Martin Wheatley told the Treasury select committee he had “no concerns” over the increase.
More than 300 borrowers are now planning a class action against the bank, claiming the increase is based on an unfair contract term.
Represented by Law Department solicitor Justin Selig, they argue amateur landlords with one or two properties should be treated as consumers and the case taken up by the FCA.
Selig has written to the FCA calling on the regulator to support the borrowers’ claim.
Selig says: “I don’t think the case has been properly considered so we might get somewhere. If not then we will be mounting our own claim directly.”
An FCA spokesman says the regulator is considering the request.
Last month, the BoI reversed the increase for 1,200 borrowers as the term was not made clear enough to them.
Brightstar Financial managing director Rob Jupp says: “There can be no grey area. It needs to be categorically decided whether the rate hike is lawful or not.”