On the 30th September Mr. Justice Hogan gave Judgment in the case of Millar & anor v. Financial Services Ombudsman,  IEHC.
The Court found that the Ombudsman made a serious and significant error, or a series of errors, in determining that the Plaintiffs should not succeed in their claim against Danske Bank, over its variable mortgage rates. Hogan J. remitted the case to the Ombudsman for a fresh determination that would not be ‘inconsistent with [this] Judgement’.
The case centred on a number of mortgages taken out with Danske Bank (formerly National Irish Bank) by the Plaintiffs in 2005 at the standard variable rate. The loans had been fully serviced throughout. The Plaintiffs’ case was that Danske Bank had increased the variable rate payable by the Plaintiffs at a time when interest rates were at an all time low. The Plaintiffs contended that their mortgage agreements with the Bank required the Bank to adjust their standard variable rate in accordance with the general interest rate available from time to time. The Ombudsman held that the Bank did not have to have regard to the ‘general market interest rates, but rather could asses its own ‘market conditions’ and adjust the interest rate accordingly. The Ombudsman further held that the Bank did not have to disclose the basis for its assessment of ‘market conditions’.
In delivering Judgment, the Court was critical of the Ombudsman’s decision in a number of respects, pointing out, amongst others, that (a) if the Ombudsman’s decision was correct, it would mean that the interest rate could be varied by the Bank, by reference to special factors, that the bank was not obliged to disclose so that customers would have to accept it at face value, (b) the Ombudsman’s remit is to have regard to wider principles than the substantive law of contract.
In rejecting the Ombudsman’s decision, the Court has opened the door to distressed mortgage holders who have, until now, had their claims of unfair practices by the banks rejected by the Ombudsman.