Do you have your mortgage with Ulster Bank? Did you opt for a fixed rate to shield yourself against rising interest rates? When that fixed term ended, what options were you given? It’s possible that you have been paying hundreds of euro more per month than you could have.

What would you think if I told you that your bank misled you? I’ve had a number of alarming cases in the last three years in which banks either withheld information that would have saved their clients thousands of euro, or misquoted fixed term rates, costing the client hundreds of extra euro per month. Shocking stuff. What is even more shocking is that the same bank is involved in all cases. That bank is Ulster Bank.

I made this alarming discovery a couple of years ago when a client came to me in just that situation. At the end of his three-year fixed interest term, he’d been offered two options; fix again or revert to the standard variable rate (SVR). On investigation, it emerged that he was entitled to switch to a tracker mortgage at the end of his fixed term. How come Ulster Bank didn’t offer him that choice? It was written in black and white in his loan offer but they conveniently neglected to draw his attention to it in the letter to him or in any subsequent communications. Like most home-owners coming off a fixed rate, my client was so delighted to see that repayments under the standard variable rate would be much lower that he went for it without much thought.

On bringing the matter to Ulster Bank’s attention, I managed to secure a refund of overpaid interest to the tune of €7,100 for my client. Ulster Bank also allowed him to switch to the tracker rate he had always been entitled to (that was good of them, don’t you think?). Imagine what it would have meant to him and his family to have that money in his pocket instead of paying off interest for all those years. Imagine, too, how much extra he would have needlessly paid Ulster Bank over the forty-year term of his mortgage. Were he to still have an SVR mortgage, his repayments would be €940 per month instead of the €640 he’s now paying on his tracker.

“It pays to know what you’re entitled to and it pays to remind your lending institution of your entitlements, particularly if that institution is Ulster Bank”.

It’s not a one-off case I’m afraid. I came across another very similar incident; other clients of mine came off a fixed-rate mortgage in April 2009 and they too were offered the opportunity to fix the rate again or opt for the SVR. We investigated and discovered that their loan offer once again made provision for a rate of interest that was “ECB rate plus 1.15%”, aka a tracker rate. In this instance, whilst strenuously denying any wrongdoing on their behalf, Ulster Bank applied the tracker rate, refunded the overpayment of capital and interest and paid compensation. My clients received a total refund of €21,308.34. It’s unacceptable that their bank, keen, in its own words to maintain a good long-term relationship with them, was quite happy to allow them to overpay every month for the entire term of their mortgage.

For this to happen once might seem like an oversight; twice begins to look suspicious. I don’t think I’m overstating it by suggesting that Ulster Bank has been operating a deliberate policy of misleading mortgage customers to shore up its balance sheet. Whatever the reason, the practice is despicable and it could be at your expense.

I have come across at least 30 cases in which Ulster Bank was the villain of the piece. In total I have recouped refunds and compensation totalling at least €350,000.

I’ve left the most damning case to last. Another client of mine became concerned that variable interest rates were creeping inexorably upwards. They asked their lender (you got it, Ulster Bank) for its fixed rates and were happy to see a fixed rate option which would mean a monthly repayment of €1,582 per month. They felt he could manage this and signed up for three years. Imagine their horror when the first direct debit relieved them of €1,734. They immediately contacted Ulster Bank assuming an anomaly which would be corrected for the next month’s payment. They were wrong. Ulster Bank had in fact misquoted the monthly payment on that fixed rate. The correct amount was €1,734 and would be every month for the next three years. “We didn’t agree to that” said my clients. “Sorry, but you’re locked in for the next three years” was the reply.

Following a complaint to an investigation by the Financial Services Ombudsman (FSO), they were paid €2,000 compensation and permitted to break the fixed-rate contract without penalty. Note that Ulster Bank had not been prepared to allow them to do this, even though it had plainly made the mistake.

It gets better. Or worse. My client still had their concerns about rising interest rates so once again asked for the bank’s fixed rates. They were given a fixed rate option of 4.5% which would mean a monthly repayment of €1,380 per month. “Happy days,” they thought to themselves. “Groundhog day” they thought a few weeks later when Ulster Bank took €1,689 out of their account. This time, following an intervention from The Money Advisers and the threat of returning to the FSO, Ulster Bank paid him €10,000 by way of compensation.

Like a child playing hide and seek, Ulster Bank is holding its breath and hoping nobody will notice. How furious would you be if you knew your mortgage repayment could be up to several hundred euro less than it is?

No wonder we don’t trust our banks.

How do I know if this affects me?

  • You bought a residential property in the last 12 years

  • Your mortgage was with Ulster Bank

  • You started out with a fixed interest rate for a set number of years, and when that fixed-rate term came to an end, you were offered the standard variable rate (SVR) or to fix again

  • Your loan agreement states that at the end of the fixed-interest period you are entitled to move to a SVR, a fixed rate or a tracker rate

  • You were never offered a tracker rate

If this sounds like you, you should contact The Money Advisers immediately on 045 881200 or email bob@themoneyadvisers.ie

This blog was updated on 10 December 2014.