The High Court has dismissed KBC Ireland plc’s appeal against a Financial Services and Pensions Ombudsman decision concerning notice of interest-rate reductions on a customer’s Smart Access Deposit Account.
Mr Justice Barr, in a judgment delivered on 5 May 2023, found that the Ombudsman had wrongly interpreted the account contract as requiring personal or specific notice. Clause 78.4.1 allowed KBC to give ten days’ notice “by whatever means” it considered appropriate. The judge said the clause gave the bank wide discretion, and the Consumer Protection Code could not be used to change the contract’s meaning because it was not incorporated into the account terms.
The court therefore set aside the Ombudsman’s finding that KBC had breached the contract, and the related finding that the bank had acted contrary to law. But it upheld the separate finding that KBC’s conduct breached the Consumer Protection Code and was unreasonable and improper under the Financial Services and Pensions Ombudsman Act 2017.
KBC had said it notified customers of rate changes through advertisements in two national daily newspapers and on its website. The judge considered the newspaper notices especially limited: they appeared for one day, ten days before a change, and the bank did not tell customers which newspapers would carry them. The judge concluded that the Ombudsman was entitled to find that this approach did not reasonably bring key information to the customer’s attention.
The Ombudsman’s January 2022 decision had directed KBC to pay the customer €75.47, representing the interest difference calculated from the account’s initial 0.3% rate, and €1,000 compensation. The High Court held that the Ombudsman was entitled to order that redress, including compensation for inconvenience. It acknowledged there might have been a slight error in calculating the interest difference but considered it too small to affect the award.
The judge also rejected KBC’s other appeal grounds, including its challenges to the refusal of an oral hearing, the opportunity to make submissions, and the reasons given for the Ombudsman’s decision. The court held that the remaining findings and redress were not undermined by the error on the contract issue.
The appeal was dismissed. The judgment left final orders and costs for further submissions: the parties were given two weeks to file brief written submissions, and the case was listed for mention on 24 May 2023.