Professor Philip Lane:

That is why we felt there was a layer of additional comfort, the interpretation that the dominant clause was the then prevailing rate in determining what the tracker rate would be when the customer rolled from the fixed rate. In other words, compared to a situation where any bank stated this type of contract was out, because there is no loss, we have included them, but the fact is they did not receive their contractual rights to be offered the tracker rate, whether it was more or less expensive. Because they are included they can use the appeals mechanism which is independent to test what they are saying that in their circumstances they interpreted the clause to which Deputy Michael McGrath is referring as the total guidance in this case. In other words, we have left the door open in order that this debate can continue through the independent appeals mechanism. As a matter of generality, the systemic issue is the definition of the then prevailing rate.

Our expert advice was that this would have led to an expensive tracker rate being charged from late 2008 onwards, but it remains the case that they are included in the examination. If they do not accept this offer or interpretation, the independent appeals mechanism is available to challenge it. On top of that, the ombudsman remains in place, as does the courts option. That is the answer we received and it provides the option to continue to pursue the matter. As regulator, we felt that at a systemic level, that was going to be in line with the regulation, but that does not prevent further action and we deliberately designed it in that way. Because they are included they can use the independent appeals mechanism if they want to test the interpretation. The people who are running the independent appeals mechanism may come to the conclusion to which Deputy Michael McGrath has come, that, essentially, in the individual case we have the evidence of what they understood the interpretation of the then prevailing rate to be; therefore, it remains a live issue for those who believe they were misled or that the full nature of the documentation they had was misinterpreted.

We are in the position where the initial offer recognised that they should have received an offer of a tracker rate, which they did not. In this case it is being stated the tracker rate the bank should have offered would have been expensive. It remains the case that the independent appeals mechanism, the ombudsman and the courts remain open to any of those concerned to challenge that interpretation. That is the built-in assurance mechanism that there are additional ways to test it. We felt that within the bounds of the regulation the dominant interpretation was that it was permissible to reset the price of the tracker mortgages in line with the prevailing conditions at the time following the roll-off from the contracts.

Our mandate is to protect consumers. That is the only criterion - whether we can protect consumers within the realm of the regulations.

That pushes it as far as we think we can go, subject to the regulatory framework. It is not about siding with the banks but about making an objective decision, with the advice of our staff and external legal advisers.