Three of us attended the hearing today. We introduced ourselves to the Chief Executive Colin Hunt, and his colleagues before the meeting.
We want AIB to understand fully that we are determined to stick this with this all the way.
[These are from my notes at the time. The full transcript is worth reading]
Michael McGrath played a blinder. I have not seen as good a performance from a politician before. He set out the case in a calm, systematic and logical manner. He quoted from the contract. He really left them with nowhere to go.
They were very uncomfortable as anyone trying to defend an indefensible position is.
They came up with the usual arguments: "This cohort never had a tracker" But Michael pointed out that this was irrelevant and their contract entitled them to a tracker.
He asked them where was their definition of prevailing rate. And of course it did not exist.
Michael pointed out that a prevailing rate did exist. It was either the rate prevailing when they took out the mortgage or else the rate on offer before they withdrew them for new business.
Michael pushed them on the difference between "a service failure" and a "breach of contract". I am ashamed to say that I felt sorry for the AIB executives trying to explain that.
AIB said that they should have had a prevailing rate available.
AIB said that this was a stain on the reputation of AIB and whether due to lack of foresight or poor controls they wanted to put it right. They have looked at thousands of cases and wherever there was ambiguity, they came down on the side of the borrower. It took them a long time to reach the decision on the prevailing rate issue and their decision had been backed up by the Central Bank and the Independent overseer.
Explain how you manufactured a prevailing rate years later
They denied that they had manufactured the rate
she asked what the rates on trackers had been and they replied "between 0.75% and 2.5%" [Unfortunately the public is not allowed to interject to correct such nonsense]
He again said it was a great shame for this to take away from the good work they had done in other areas. If they allow themselves to be forced into High Court it would damage them financially and reputationally. Only the legal profession would benefit.
He asked them how much it would cost the bank but they had not costed it or provided for it in their accounts.
Michael finished his first slot with a brilliant wrap up
- We agree that Prevailing Rate is not defined in the contract
- We agree that you should have offered a prevailing rate to this cohort
- It was either the rate at drawdown or the last rate offered before you withdrew it for new business
He pointed out that AIB had done a lot of good things on mortgage rates, arrears etc. They should not allow this wound to fester. He asked them to do the right thing by customers. The new Chief Executive had said he wanted to draw a line under all these issues and this was his opportunity to set things right. He should not allow AIB to be dragged kicking and screaming into the High Court to have the matter decided against them.
This was followed by Gerry Horkan and Pearse Doherty who focussed on other issues such as remuneration and the sale of non-performing loans and the level of Corporation Tax paid.
Then Rose Conway Walsh from Sinn Féin followed up brilliantly on the prevailing rate issue.
She quoted from the Terms and Conditions on what a tracker rate meant to be told that they were "composite terms and conditions"
They are facing 60 legal cases on trackers, about 3 or 4 of which relate the the Prevailing Rate issue. They expect them to be finished in the High Court by the end of the year.
The Independent Appeals Panel had ruled on 96 prevailing rate cases and rejected 95. One was upheld because there were extenuating circumstances.
She again asked Colin Hunt to look back at this issue. "Would you not revisit it?". Out of your €1.25 billion profits even as a PR exercise?
Hunt replied: I have an obvious incentive to draw the line under it. I want to bring an end to the legacy issues. But this has been looked at very comprehensively. We are not the final arbiter. The final arbiter is the Central Bank.
Conway Walsh: No they are not the final arbiter. The final arbiter will be the High Court.
Again Hunt explained that he was satisfied with the bank's position.
There were other contributions from other members of the Committee and then it came back to Michael McGrath again. He spoke about a few different issues and then finished with a discussion of the new Banking Culture Board.
"I want to make an ask on my part. The real test of culture change is when the ball bounces, does it bounce on the side of the customer or the bank? You should ask yourselves not "What must we do?" but "What should we do?".
Pearse then came in again to echo Michael McGrath's sentiments. But added a really brilliant comment. "This is not just a stain on the bank's reputation, but Mr Hunt, if you don't resolve this fairly, it will be a stain on your personal reputation." [ I had to sit on my hands to stop myself clapping]
He revisited the "service failure " vs. "breach of contract" issue. "Are you saying that of the 11,924 people affected, there were no breaches of contract? "
They agreed that in some cases contracts were broken.
Pearse"When the contract is vague, when prevailing rate was not defined, you must find against the author of the contract"
AIB reiterated that the breach had no impact on the customer as the rates would have been higher.
The €1,000 compensation was what the Ombudsman typically awards in cases like this where no loss has been sustained.
Pearse asked Colin Hunt to look at it with a fresh pair of eyes.
And he asked if AIB settles one of these cases on the steps of the High Court that they won't insist on a confidentiality agreement. AIB said that when they lose a case, they look back to see what other customers might be affected by the issue.
But if we settle a case, it's often explained by extraneous issues.
Colin Hunt finished by saying
- This is an issue of grave concern to us
- We put customers first
- We have come to a position on the prevailing rate issue
- But we hear you.
Brendan