I’d appreciate if you could get definitive clarity on a question posted on a number of consumer websites. I have a Bank of Ireland mortgage. I benefitted from the 2 per cent bonus offer but with a clawback threat if redeemed within five years.
I understand this clause was removed from Bank of Ireland mortgage contracts a few months ago as it appears to be illegal under the Consumer Credit Act and an EU directive.
Can the clawback be enforced? I and others are trying to get legal clarity.
Mr M.B., email
Bank of Ireland certainly believes it can.
Its position is very clear. Contracts that were signed before the clawback provision was removed are subject to the provisions in place when that mortgage contract was signed.
Unfortunately, the only way you are going to get “definitive clarity” of an issue like this is through legal precedent in the courts and that’s hardly a path anyone wants to take – the 2 per cent gain would very quickly be wiped out by any (possibly unrecoverable) legal costs.
Contract law is an area that keeps bank legal teams among the largest legal entities in the State. AIB was recently reported to have so many solicitors that if it were an independent law firm, it would rank among the top five in Ireland. Bank of Ireland demurred from releasing figures on its legal staff but you can take it they will be little different.
As you mention, the bank has confirmed that in March of this year, “in line with the Mortgage Credit Directive”, it updated its terms and conditions and there has been no clawback clause in place for customers who have drawn down a mortgage since then.
However, it adds: “Any mortgages that were drawn down prior to this are subject to the terms and conditions which applied to the specific offer they availed of at the time.”
My slight quibble with this is that, although the Mortgage Credit Directive was transposed into Irish law in March 2016 in line with the requirements of the European Commission, the actual directive was signed in February 2014.
So the bank knew for a couple of years that what it was doing on this clawback arrangement was going to be effectively illegal but just not yet. Morally, at least, it was sharp practice. But morality and legality are very different standards.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice.
