The Bank of Ireland (BOI) has responded to a formal complaint by the RLA, following the bank’s decision last month to hike its tracker rate for buy-to-let customers with effect from May.
In a letter to the RLA, Mike Joyce, BOI’s director of UK consumer banking, claimed the bank had not made the change to its tracker rate “lightly or without careful consideration”. Mr. Joyce stated that the decision had been “scrutinised internally” and that the bank had, “…engaged extensively with both the Prudential and the Conduct arms of the FSA before deciding to implement the change.”
Mr. Joyce claimed the changes were required because of the increasing cost of providing the service and that the changes, “…bring the rates into line with Buy to Let rates that are available to customers in the wider market.”
Mr. Joyce also confirmed that the hike will affect 8,000 BOI customers with mortgages obtained prior to 2004, and has only been applied to, “…those accounts where the terms and conditions clearly permit.”
As a concession, Mr. Joyce stated that no early repayment charge would apply to any customer who chose to move their loan to another lender. He also stated that BOI would assist any customers experiencing hardship caused by the changes and “work with them to mitigate the impact of the rate increase”.
In conclusion, Mr. Joyce stated that any customer who wished to complain could do so, and reiterated customers’ right to take their complaint to the Financial Ombudsman.
The BOI’s response came following the receipt of a letter of complaint by RLA chairman, Alan Ward, last month.
In his letter, Alan wrote, “We are extremely disturbed that conscientious landlords, who are customers of the Bank of Ireland and your division Bristol & West, will find the sharp increase unfeasible – leading to the increased potential for defaults and repossessions.
“Many of the landlords affected will have had hitherto excellent credit ratings; and, whilst we are more than aware that interest rates go up as well as down, this hefty hike in the tracker rate will effectively leave them financially high and dry.”
Alan also questioned the Bank of Ireland’s lack of ambition to support the burgeoning private rented sector, stating, “We are concerned that the Bank of Ireland does not recognise the potential of the private rented sector; and, instead of pursuing short-term targets, should consider the long-term benefits of encouraging a growing sector of the housing industry.”