The Financial Conduct Authority (FCA) has written a letter to the Treasury Select Committee, pointing out that many of the Bank of Ireland mortgages involved were sold via intermediaries, and that borrowers affected could take legal action against them.

He wrote: “These mortgages were sold at least nine years ago, a large number by intermediaries that were unregulated at the time. Our ability to seek this information or take action is therefore very limited.

“Customers concerned have the right to complain to the firm, to the intermediary that sold the product and, in most cases, to the Financial Ombudsman Service.”

He confirmed while sales took place in a pre-regulated era, intermediaries would still be subject to general consumer laws:

“Customers could, for example, take legal action against the intermediary if they believe they had received negligent advice.”

If the FCA received any evidence intermediaries had acted inappropriately, it would consider any action against them on a case-by-case basis, he added.

On 1 May 2013, the Bank of Ireland raised rates on 13,500 buy-to-let and residential tracker mortgages. Behind the scenes, the FCA has been working with the Bank of Ireland on its communications with affected borrowers, including ensuring the bank told customers of their right to complain.

In his letter, dated 21 May, Wheatley argued the bank had acted fairly and in line with terms and conditions in its mortgages, which were sold before statutory mortgage regulation was introduced in 2004.

Many of the mortgages sold were buy-to-let products which would still be unregulated today.

The lender had also given affected customers the option of switching mortgages without paying early repayment charges. However, according to landlords contesting the move, a £195 administration fee still applies.

The Bank of Ireland’s rate rise has sparked much controversy among consumer organisations and a group of landlords have launched a class action contesting the bank’s actions.

The Law Department principal Justin Selig, who is leading the class action, questioned the clarity of the Bank of Ireland’s contracts.

He said: “While this letter is not very encouraging, it was written at the time we sent our submission in and they would not have received it then. I know they are currently in discussions with the Bank of Ireland on the points we have raised.”

He added he was yet to see an offer letter which made the rate rise clear: “And we have seen a lot of offer letters.”