Ulster Bank to appeal High Court defeat in tracker mortgage dispute with ombudsman

Bank has said adverse outcome in the cases could affect thousands of customers and trigger ‘enormous financial’ consequences for the lender

Ulster Bank intends to appeal a High Court ruling that upheld two home loan customers’ entitlement to tracker mortgage refunds and compensation, which could cause the lender to pay compensation to thousands of other homeowners in a similar position.

The lender’s senior counsel, Marcus Dowling, said an application would be made to appeal directly to the Supreme Court, bypassing the Court of Appeal. However, he asked the High Court to hear his application for leave to appeal to the Court of Appeal in the event the Supreme Court does not opt to hear a “leapfrog” appeal.

Mr Dowling said his client and the opposing party – the Financial Services and Pensions Ombudsman (FSPO) – might be able to agree questions of law that meet the threshold of appeal.

Francis Kiernan, for the ombudsman, said the parties would communicate on the matter. He clarified that the ombudsman would not be agreeing that there had been any error in its decisions.


Ms Justice Marguerite Bolger scheduled the short hearing for later this month.

Last month she dismissed Ulster Bank’s appeals against the ombudsman’s findings that two borrowers were entitled to tracker mortgage refunds and compensation. The bank, she said, had failed to persuade her that the ombudsman had fallen into “serious and significant” error in his decisions.

The ombudsman’s binding decisions could be upheld on the basis that the bank’s conduct had been contrary to its contractual and consumer-protection obligations.

Ulster Bank, which is part of the NatWest Group and is exiting the Republic of Ireland market, said in its latest annual report that the outcome of the cases “may have a materially adverse impact” on the firm. Counsel for the bank told the court in October that the cases may affect “thousands” of customers and trigger “enormous financial” consequences for the lender.

The two borrowers who took their cases to the ombudsman had been excluded from redress in an industry-wide mortgage tracker scandal examination overseen by the Central Bank between late 2015 and mid-2019. More than 40,000 cases of overcharging were identified across Irish lenders during this process.

In one of the cases central to the Ulster Bank appeal, two borrowers took out a mortgage in April 2004 that initially had a one-year reduced interest rate, before reverting to Ulster Bank’s so-called home loan rate, its standard variable product. They signed a so-called flexible mortgage transfer form in 2006, entitling them to move on to a tracker loan.

They subsequently applied in May 2007, as European Central Bank rates were rising, to fix their interest rates until August 2010.

Their loan documents said the bank may offer to extend the fixed period or offer “alternative available products”. If these were not accepted, the borrowers would revert to the bank’s variable home loan rate.

After the fixed-rate period, the borrowers sought to revert to their previous rate but the bank refused as it had stopped offering this rate to new customers in 2008.

The bank never explained that the tracker rate might not be available when the fixed-rate period ended, the judge said in her ruling. The ombudsman was entitled to decide that the borrowers’ contractual entitlement to the tracker rate continued at the time they opted to fix their rate, she found.

Ulster Bank initially appealed a third decision but the court was told during the hearing of the appeals last October that the parties had agreed this one would be set aside.

On Tuesday, Ms Justice Bolger made orders setting aside this decision and remitting the case back to the ombudsman for fresh consideration.

Ellen O'Riordan

Ellen O'Riordan

Ellen O'Riordan is an Irish Times reporter