BANKS CAUGHT CONNING US AGAIN; Financial Regulator Blasts Mortgage Lenders for Misleading Customers
Byline: Ferghal Blaney Consumer Affairs Correspondent
BANKERS were condemned yesterday for trying to bully consumers into switching from tracker mortgages to more costly home loans.
The criticism from the Financial Regulator was last night welcomed by mortgage advisers and politicians, who said 'transparency' was essential for house buyers taking out home loans.
Ciaran Phelan, chief executive of the Irish Brokers' Association, accused banks of pressuring customers into changing to dearer products, and said the regulator's comments would help stamp out this practice.
In many cases, the changeover could cost the borrower nearly [euro]4,000 more in repayments per annum.
Mr Phelan said: 'It is difficult to countenance any reason for consumers to willing give up a tracker mortgage in favour of a fixed or variable rate. We would urge anyone who feels pressured to seek advice from an independent broker before signing any new contract with their lender.'
A spokesman for the regulator would not identify which banks had been caught out, but did reveal that the practice was prevalent right across the sector and was not limited to one rogue lender. Regulator Matthew Elderfield has now written to all the financial institutions setting out new measures to ensure consumers understand how a move to an alternative mortgage could cost them more.
'As a result of this finding, mortgage lenders have been requested to fully disclose the impact of any switch from a tracker mortgage rate in all customer communications, with immediate effect,' said a spokesman for Mr Elderfield.
One mortgage insider last night said: 'Some banks have been trying to convince borrowers to come off tracker mortgages and on to a fixed rate over two or three years without making them aware of the fact that they can't go back on to their tracker mortgage at the end of it.'
Speaking to TV3 last night, Karl Deeter of Irish Mortgage Brokers said: 'Until now if you were coming off, for instance, a fixed rate, you would get a list of other rates you can go for; the third one on the list might be a tracker, and the first one might be a variable, and you have to tick a box, and it didn't really spell it out for people the gravity of what you were doing.' The Central Bank also said yesterday it has not found any evidence of banks offering incentives to move off tracker mortgages.
However, the Financial Ombudsman has received a number of complaints from people who claim the banks have tried to force them off their tracker mortgages. …