Permanent TSB has been cleared of discriminating against a 69-year-old man after refusing to give him a €275,000 personal loan to trade down to a smaller home in his retirement.
In dismissing the complaint, however, the Workplace Relations Commission also found it was "easy to understand the complainant's frustration" as his attempts to source finance for an important reorganisation of his affairs "fell between a number of stools".
The Workplace Relations Commission was told an estate agent was not prepared to wait for the complainant to find a buyer for his current home – and would only deal with a buyer who had a mortgage approved or cash on hand as the seller wanted a “quick sale”.
George McLoughlin made a complaint under Section 21 of the Equal Status Act 2000, alleging he was discriminated against by Permanent TSB on the basis of his age.
He told the commission he decided to “downsize” to a smaller home when he retired at 65, and found somewhere which suited his needs in January 2021.
The estate agent told him the sellers “wanted a quick sale and would only accept offers from ‘cash buyers’ or buyers with prior loan approval,” he said, so he approached his bank looking for €275,000.
The loan he wanted was worth about 50 per cent of the value of his current home and was about 60 per cent of the value of the property he planned to buy. The rest of the purchase price would come from his savings, he said.
He said the loan would be repaid upon the sale of his existing home, which he owns outright.
But the loan was refused on the grounds that because he was 69, he was “too old to be considered for any loan exceeding €75,000 irrespective of any assets provided as security”, Mr McLoughlin said.
‘No discretion’
He said in further discussions the bank had taken the position that its lending criteria were “decided by the Central Bank” and that it had “no discretion” to approve his application.
But he argued that the only relevant requirement imposed by the Central Bank on Permanent TSB was to make sure that a loan applicant could provide "adequate guarantees" that the loan amount would be repaid from future income or the disposal of assets.
He said he was able to guarantee 250 per cent of the loan amount he sought and there was “zero risk to the bank”.
After sending Permanent TSB a statutory notification form under the Equal Status Act, he said the bank told him it “might review” whether it could provide a bridging loan – but said that when he followed it up he was told no such arrangement would be approved in advance of a potential house purchase.
He submitted that the bank had discriminated against him by excluding him from financial services “readily available to the population generally” and so “diminished his dignity, independence and autonomy”.
Paul Hutchinson BL, appearing for Permanent TSB, submitted that a distinction had to be drawn between Mr McLoughlin’s initial separate applications for finance: one for a personal loan of up to €75,000; the other for a €275,000 mortgage.
Mr Hutchinson said the complainant had agreed to withdraw his personal loan application when a bank worker advised him of its limits. He said the sum sought by Mr McLoughlin would require either a mortgage, which the bank offered as a normal product, or a bridging loan, which the bank would only consider on a case-by-case basis.
“The parameters of the bank’s credit policy for [a bridging loan] were not acceptable to the complainant and he did not proceed with any formal application,” he said.
‘Outside parameters’
“The complainant’s loan requirements were simply outside of the parameters of what the bank’s then-credit policy would ever permit for reasons unrelated to his age or retirement status.
“The complainant sought to obtain a loan of €275,000, purchase a property with this loan and, once completed, sell his current property in order to repay the loan, which constitutes a bridging loan,” Mr Hutchinson said. “The bank did not offer bridging loans as a standard product at the time and does not do so now,” he added.
He said the bank worker who had dealt with Mr McLoughlin had only gone as far as providing him with loan “application advice” on the basis of a “preliminary review” of information.
“The complainant did not formally apply for a mortgage which, in any event, would not appear to be suitable for the short-term purpose which [he] required,” Mr Hutchinson said, adding that Mr McLoughlin had sought to get credit within a week when a mortgage would usually take around four months to arrange.
Mr Hutchinson argued the bank was bound by the Consumer Protection Code of 2012, requiring an affordability assessment which took account of the age, health and employment status of an applicant, along with their dependents, knowledge of financial products, and known future changes in circumstance.
He added that the bank would be open to statutory claims for damages if it failed to comply with its obligations.
Adjudicating officer Pat Brady found the bank refused the complainant his application for a personal loan of €275,000 made on February 1st, 2021 because it capped such loans at €75,000.
Prior discussions concerning a potential mortgage application “did not add up to a loan application”, he wrote.
Mr Brady ruled Mr McLoughlin then decided not to pursue a “bridging loan” application.
‘Formal application’
“There was no refusal of any application at that stage as no formal application had been made,” Mr Brady wrote, though Mr McLoughlin had been advised he would not meet the lending criteria for a “bridging loan” anyway.
He noted that the bank had argued Mr McLoughlin’s main problem was that Permanent TSB “did not actually have a specific product that was suitable to his needs, rather than any issue of discrimination”.
“There is considerable merit in this analysis,” Mr Brady wrote.
He said the affordability principle underlying the Consumer Protection Code assessment related to income rather than the value of an applicant’s assets.
“While the complainant might have met a differently formulated test based on [his assets] that is not the test universally now applied within the financial services sector,” Mr Brady added.
“It is easy to understand the complainant’s frustration as his attempts to source finance for an important reorganisation of his affairs fell between a number of stools,” he wrote.
But he said the criteria applied by the bank stemmed from its regulatory obligations and found the reference to Mr McLoughlin’s age was “proportionate and justified”.
“There is no prima facie case and the complaint fails,” Mr Brady wrote.
