A recent case indicates that by holding itself out as providing

A recent case indicates that by holding itself out as providing advice a lender may increase the duty owed to its customer

Irish Life and Permanent PLC (trading as Permanent TSB)  v Financial Services Ombudsman & Oths

This case involved four appeals by the appellant Bank against decisions of the Financial Services Ombudsman.  The case centred around the duties of a Bank towards a customer who seeks advice in relation to a mortgage product.

The appellant bank had provided mortgage advice to the four notice parties to this action.  All of the parties were customers of the respondent and had transferred from a fixed-interest tracker mortgages to variable interest rates but were unable to switch back when their original fixed rate period had expired.  All of the parties claimed that this was on foot of poor advice from the appellant.

The Court found that the common theme running through the appeals was that the Bank had no fiduciary duty to advise its customers and that it had, not, in fact done so.  The lender/borrower relationship was discussed and such a relationship was held not to be a fiduciary one.
It was also held that a Bank does not have a general duty to insist that customers take independent advice in relation to Bank dealings.  Despite these findings, the Court went on to say that some measure of realism must temper this analysis.

The Court found that the Bank, with its reference to mortgage advisors and a mortgage advice centre, appears to have created expectation on behalf of customers.  The Bank held that the Ombudsman was entitled to invoke Chapter 2.12 of the Consumer Protection Code (2006) which provides that:

"A regulated entity must ensure that all information it provides to a customer is clear and comprehensive and that key items are brought to the attention of the consumer.  The method of presentation must not disguise, diminish or obscure important information".

The Court notably concluded in the one particular appeal here (Thomas case) that the Ombudsman was entitled to conclude that a retail Bank should properly alert its customers – if only in the most general terms – of the potentially serious adverse consequences of a particular decision, especially where it seems clear where those customers were seeking advice and guidance from the Bank's mortgage advice centre and that these are standards which modem retail Banks might reasonably be expected to uphold.

For advice on the above mentioned issue or if you have a Banking or Security query please contact your usual contact at Byrne Wallace Shields LLP.