Brand New Customers Only

Brand New Customers Only.

We have all seen the term “brand new customers only” for many financial products. This in our opinion is unfair on loyal clients and we believe the financial regulator thinks so too.

The new incoming financial regulator, the Financial Conduct Authority (FCA) boss Martin Wheatley has issued a warning to lenders where they are increasing interest rates for existing borrowers using the small-print of mortgage contracts.

The most recent case we have highlighted was that if Bank of Ireland that is increasing interest rates in April and September for clients on their tracker mortgage range despite the fact that Bank of England base rates have not increased.

Our view
Under TCF Treating Customers Fairly Guidelines, all financial companies are required to do so, i.e. treat us fairly. In this case, the cost to borrow money and then lend it to existing clients was set on the day the mortgage was set out, so how can it now be fair to set higher rates when the money that was borrowing at the time was set?

We understand that costs to borrow increase and decrease and we understand that in the past there has been a certain amount of cross subsidy by all as rates rise and fall. It will be interesting to see how the new regulator reacts to lenders changing rates when the terms for an existing client has not changed.

If the bank ‘made a boob’ when setting the rate just to be competitive and attract clients then they should be made to stick to it, not change the rules as they see fit. A larger question for the Bank of Ireland issue that the regulator should tackle is:

Why have Bank of Ireland customers been penalised on their tracker mortgages but Bank of Ireland tracker rate customers that were introduced by the Post Office allegedly have not has their rates increased?