Financial Conduct Authority chief executive Martin Wheatley says the regulator does not have “any concerns” about the Bank of Ireland’s rate hike on its tracker mortgages.
In February, the BoI revealed it is more than doubling the rate for 13,500 borrowers on its tracker mortgages, some 7 per cent of its borrowers.
Around half of those affected are buy-to-let borrowers who will see rates increase from 1.75 per cent above base rate to 4.49 per cent above base on 1 May. Residential borrowers will see their rates rise in two stages, firstly to 2.49 per cent on 1 May and then to 3.99 per cent on 1 October.
The bank blames the rise on increasing capital requirements.
On 8 March, Treasury select committee chair Andrew Tyrie wrote to Wheatley expressing concern at the move and asking if it amounts to misselling and what action the FSA is taking.
In his response, dated 12 March but only published last week, Wheatley says the sale of these mortgages are outside of his remit as they were completed before 2004 regulations.
He says: “We currently have no plans to treat this as a prima facie case of misselling. 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.”
Wheatley says the BoI has volunteered to exclude those who believed they were signing up to a life or lifetime tracker and those without the clause justifying the increase in their contracts.
On 21 March, Tyrie wrote again to Wheatley accusing him of not addressing the main issues and demanding further answers.
Brightstar Financial managing director Rob Jupp says: “If BoI is allowed to get away with this then it could mean the end of all meaningful mortgage contracts in the UK. It would leave consumers with no confidence that their contracts may be altered to their detriment in the future.”