Couple near retirement had no prospect of repaying unsuitable mortgage, court told

The couple say they learned they had been mis-sold only in 2019 after going to financial adviser

A bank that gave an allegedly unsuitable mortgage in 2007 to a couple with no prospect of repaying it before they retired was in breach of the Consumer Protection Code, the High Court has heard.

As a result of that, the Financial Services and Pensions Ombudsman (FSPO) was wrong to find that a complaint made 13 years later about the mis-sale of the mortgage by IIB to Joseph and Ann Baynes, from Dundrum in Dublin, was not made within the required time limits, the court was also told.

The Baynes say they learned they had been mis-sold only in 2019 after going to financial adviser Ben Hoey of Quartech which helps people who have been mis-sold mortgages.

However, the FSPO said they were aware of their own personal circumstances and, if they wished to complain, they ought to have reasonably known this as recently as 2011 when they got into financial difficulties and had to have the loan restructured.


On that basis, the FSPO in 2021 refused to deal with their complaint.

The couple brought High Court proceedings seeking to have the decision overturned and an investigation carried out.

The FSPO denies their claim and says the decision was correct in law. The case opened before Mr Justice Cian Feritter on Tuesday.

The court heard IIB Homeloans, later rebranded as KBC Homeloans, gave the Baynes a loan of €150,000 towards the purchase of two apartments in Portugal just before the economic crash in 2007. They had used their unencumbered home in Dundrum as security for the loan.

They planned to get additional credit in Portugal to buy the apartments but failed to do so and they had used the IIB loan to pay towards the deposits on the properties.

When they failed to get the additional credit, they lost their deposits.

They continued to make repayments on the IIB loan but, in 2011, they got into financial difficulties after Ms Baynes became seriously ill.

They went to the Money Advice and Budgeting Service (MABS) and the loan was restructured so they could stay in their home.

Pressure remained on them to sell their home and meet their debt by downsizing.

After consulting Mr Hoey they made a complaint to the FSPO, who said they were out of time. While the FSPO can extend time for making complaints, it found the couple had been aware of issues with the mortgage as long ago as 2011 when it was restructured.

Opening their case before Mr Justice Feritter, Gary McCarthy SC, for the Baynes, said Mr Baynes was 62 and unemployed when the mortgage was taken out in 2007 while his wife was 57 and earned €2,000 a month.

It was clear at the time the couple would be in their 70s and some years past retirement age by the time the 13-year mortgage had to be repaid, counsel said.

The bank was in breach of the Central Bank’s Consumer Code in how it sold this financial product, he said.

That the Baynes went to MABS in 2011 for restructuring of their mortgage did not speak to the conduct of the bank in 2007, he said. They were not actually aware at that time that the mortgage had been mis-sold to them, he said.

Patrick Leonard SC, for the FSPO, said the High Court should set aside a decision of the ombudsman only if it was unreasonable, irrational and failed to take into account factual matters. That was not so in this case.

The extent to which it would be just and equitable to do so are quintessentially issues of fact for determination by the FSPO to which the court will give a significant degree of deference, he said.

There was a very high threshold before the court should intervene in these decisions and it had not been met, he said.

The case continues.