Mortgage hike terms 'must be fair'
The City regulator must ensure that thousands of Bank of Ireland customers who are facing steep hikes to their mortgage payments are being treated fairly, the head of a powerful House of Commons committee has urged.
Treasury Committee chairman Andrew Tyrie said not enough information has yet been provided to be confident that the Financial Services Authority (FSA) has thought carefully about the issue.
Bank of Ireland has been contacting the 13,500 customers who will be affected by the rate increases on its base rate tracker mortgages in the coming months, most of whom have a buy-to-let loan.
The announcement, which has provoked anger, comes despite the Bank of England base rate being held at a record 0.5% low for four years.
A letter written to Mr Tyrie by managing director of the FSA Martin Wheatley was published by the committee. But Mr Tyrie has now written back to Mr Wheatley to say that his letter "does not address the main issues". Mr Tyrie's latest letter asks for a "much more substantive reply".
The committee chairman said: "We need more information to be confident that the regulator has thought carefully about this issue. It must exercise judgment to ensure that customers are being treated fairly. Mr Wheatley's letter appears to fall short on both counts."
In his letter written earlier this month, Mr Wheatley said that the regulator has impressed upon senior managers the need to "ensure fair customer outcomes". He said that the FSA did not identify any concerns when looking at the interest rate variation terms to indicate they may be unfair.
He continued: "However, only a court may determine whether a term is unfair under the regulations. If a customer is eligible and complains to the Financial Ombudsman Service, it may come to its own view about what may be fair and reasonable in the circumstances of any particular case."
In response to a question concerning whether the regulator would treat the rate rises as a "prima facie case of mis-selling," Mr Wheatley said in his letter that the regulator has "no plans" to do so.
From next week, the FSA will be replaced by a new beefed-up system of regulation which includes the Financial Conduct Authority (FCA), which has promised to force firms to put customers at the heart of their business models. Mr Wheatley is the incoming chief executive of the FCA.