Impact of Ulster Bank tracker mortgage case remains unclear, says Davy

Michael Bolton

Despite Ulster Bank losing its High Court appeal against tracker mortgage cases, the impact of this ruling should be manageable for the bank, according to Davy.

Earlier this week, Ulster Bank lost a High Court appeal against findings that two borrowers were entitled to tracker mortgage refunds. This could lead to the lender paying compensation to thousands of other customers.

In July 2019, the Central Bank of Ireland published its final TME, resulting in €680 million of redress and compensation to impacted borrowers, at a total cost to the system of in excess of €1 billion.

The Central Bank of Ireland has stated that where the FSPO makes a ruling, this needs to be applied to all customers covered by the same circumstances.

In 2022, the FSPO ruled on 134 cases related to tracker mortgages and upheld or substantially upheld three of those.

As Ulster Bank claim this latest ruling could potentially impact thousands of borrowers, Davy has called for legal uncertainties to be delt with when they are sold to the AIB group.

"The impact of the latest ruling, relating to Ulster Bank, remains unclear in terms of direct financial impact for Ulster Bank and read across for the rest of the system. Nonetheless, any impact should be manageable.

"Average redress and compensation across all cases covered in TME is c.€17,000. In addition, the portfolio is shortly due to be sold to AIB Group – it would be customary to either include representations and warranties in the sale contract or for the price to reflect legal uncertainties. "