The chairman of the Treasury Committee, Andrew Tyrie, has written to the FSA to ask what action it intends to take over Bank of Ireland’s proposed tracker rate hike.
Bank of Ireland recently wrote to 13,500 customers to outline plans to more than double the base rate it charges them after triggering a ‘special condition’ clause in the mortgage agreements.
A spokeswoman for the bank confirmed to Mortgage Strategy the terms and conditions allow for a differential increase if “30 days notice has been given or for any other valid reason” as long as the guarantee period has passed. The guarantee period of the 13,500 borrowers who have been notified today finished in 2006, says the bank.
Tyrie has written to FSA managing director Martin Wheatley to express his concerns over the proposed differential hike, particularly as the Bank of England’s base rate remains unchanged, and whether it will be treated as mis-selling.
He asks whether he is aware of any other lenders who have the same clauses in their mortgage agreements and what conversations he intends to have with both the prudential regulatory arm of the FSA and the Financial Ombudsman Service.
Brightstar Financial chief executive Rob Jupp says: “If Bank of Ireland are permitted to get away with this, all bets are off as far as mortgage contracts are concerned in the UK. It is really important crossroads and the FSA and the Government have to understand the importance of it. It is a defining moment for the industry.”