KBC denies claims it is exploiting vulnerable customers
KBC Homeloans has denied exploiting vulnerable mortgage holders after it admitted it told a customer struggling to meet repayments that it would only extend an interest-only period if the couple came off their tracker mortgage.
The Financial Regulator warned lenders in October that they must act in the best interests of consumers when it comes to switching from trackers to other forms of mortgages.
Financial adviser Karl Deeter accused KBC Homeloans of forcing a customer off a tracker mortgage. The couple want to extend the interest-only period on their homeloan.
Currently the couple's tracker rate is 1.1pc over the European Central Bank rate, or 2.6pc at present.
But Mr Deeter said that KBC Homeloans told him it would only extend the interest-only period if the customers changed to a standard variable rate, which is 2.6pc above the ECB rate. This means they would go from an interest rate of 2.6pc to 3.99pc.
Brutal
"In trying to negotiate with banks it would be brutal if borrowers in difficulty were negotiated with by banks in a manner where they end up worse off," Mr Deeter said.
Consumer director of the Financial Regulator, Mary O'Dea, warned lenders before Christmas that they must disclose the "short, medium and long-term effects of switching" from a tracker for each consumer.
Ms O'Dea also advised consumers to make sure they are fully aware of the consequences of making such a switch.
A spokesman for KBC Homeloans denied the lender was seeking to exploit vulnerable customers by encouraging them to ditch tracker mortgages.
The spokesman said the customers in question were seeking to extend the interest-only period beyond the maximum allowed period of three years.
If the lender agrees to extend the interest-only period the mortgage would switch to a standard variable one, but the couple would go back to a tracker rate when the the new interest-only period is up.
- Charlie Weston Personal Finance Editor
