Bank of Ireland Bank of Ireland Staff- Lost Tracker

[Brendan Burgess]

"New Staff Non-Standard Variable Rate Mortgage - Rate 3.50%

3. Not directly linked to ECB Interest movements - important given predicted interest rate increases over coming 6 months

I am confused. If the ECB rate was expected to rise, surely all variable rates would rise, even if it was not "directly linked".

These 1,800 bankers gave up a variable rate which was linked to the ECB rate to a variable rate which could be changed at the lender's discretion.

What am I missing here?

 

[Sarenco]

I suspect (although I'm open to correction on this point) that in practice the staff rate was set at the Revenue's BIK reference rate for qualifying home loans and at the time this was considerably lower than the standard variable rate or any tracker rate that was available to non-staff borrowers.

 

[todo]

I have heard it argued that "Home Loan Variable Rate" is not automatically the Standard Variable Rate as Trackers are also variable rates. I don't buy that argument as if it were a tracker, it would specify that it was a tracker.

The only difference between a BOI tracker mortgage and an BOI svr mortgage agreement was a special condition otherwise they are identical.
Both listed as xxx instalments variable at x.x%

It would appear to me that BOI did call both there tracker and svr products variable rate mortgages. I can see how it could easily confuse a consumer. Far from clear and concise in my opinion.

 

[Linten]

In August 2006, a Bank of Ireland memo for staff was headlined "New Staff Non-Standard Variable Rate Mortgage - Rate 3.50%...a market leading rate with no Benefit in Kind applying". The memo went on to later say "Bank of Ireland Mortgages are delighted to offer you our new staff non-standard variable rate mortgage at just 3.50% currently". "Key Benefits for our Staff 1. Market Leading Rate 2. No Benefit in Kind 3. Not directly linked to ECB Interest movements - important given predicted interest rate increases over coming 6 months 4. Simple and easy to avail of". The memo went to later say "This is the first in a planned range of new and exclusive offers for staff". The memo detailed Terms & Conditions, including the following "If you are currently on the 4% preferential fixed staff rate and opt for this product, you will have the option to switch back to the preferential rate once per tax year." and "If you are currently on the3.00% preferential fixed staff rate you will NOT have the option to switch back to this rate. If you want to keep your 3.00% fixed rate do not take out our new staff non-standard variable rate mortgage."

This memo incentivised staff to avail of the new rate.
Warnings were provided to staff on preferential fixed staff rates.
Warnings were not provided to staff on tracker rates. The implications of giving up a tracker rate were not detailed and the loss of a future entitlement to a tracker rate was not detailed in Terms & Conditions.

This is hugely relevant. Approx. 1800 BOI staff switched from Tracker to Staff Variable to avail of lower variable rate than existing tracker rate and which was tracking the Revenue BIK rate of 3.5%. This product was actively promoted by BOI Staff Banking at the time as a commitment to provide lowest possible mortgage pricing for staff. While staff were well aware of the value of a Tracker mortgage, they had no reason to believe that they would not be able to revert to Tracker at any stage in line with future downward ECB rate movements. There was no indication or warning given when signing the MFA for the variable mortgage, that they would lose their Tracker option if they signed up to it. Despite what some posts are suggesting, BOI were not in any way at that time trying to entice staff off Tracker for any reason other than the availability of a more competitive rate.
When budget 2007 increased the BIK rate to 4.5% this variable rate product was effectively defunct and Staff Banking quickly came up with a highly competitive 3 year fixed rate which most of not all of the 1800 staff signed up to.....

That's the background......fast forward to 2011 when BOI following a CBOI review agreed to restore Tracker(as specified in their original loan documentation) to 2096 customers who had switched from Tracker to a FIXED rate and had then been denied Tracker on expiry of the fixed rate. As reported in Irish Indo 6/5/11, the basis for restoring the Tracker was that customers were not given enough information by the bank about the cost of giving up their trackers when they sought to lock in to a fixed rate. There is no mention of MFAs or whether the Bank had legally enforceable contracts by virtue of these customers having signed MFAs, which those 2096 customers would have done. The decision appears to have been based on the Central Bank having strict rules requiring lenders to set out in detail and in writing to customers the exact cost of giving up a tracker.

Clearly in the case of the staff Variable rate mortgages, staff were not given any information in writing, nor did the MFA set out the possible financial cost of giving up a Tracker mortgage.....quiet the opposite with staff being actively encouraged to take up this option. This begs the question of whether these variable rate mortgages were included in the Central Bank review which took place in 2010/11. There is no mention of variable rate mortgages in reporting of this back in 2011. Were any of these 2096 customers who were put back on tracker on variable rates at any stage?

As one of the 1800, I don't consider myself to have been 'sucked in' but I do believe there is a huge inequity here, purely based on the fact that the staff mortgages moved to a variable rate for a short period and were not given the same consideration by BOI as fixed rate mortgage customers, when arriving at decision to reinstate a certain number of tracker rates to customers.

Let's hope that CBOI review all these cases in detail and that all 1800 staff justifiably have their tracker rates reinstated.

 

[Sarenco]

Let's hope that CBOI review all these cases in detail and that all 1800 staff justifiably have their tracker rates reinstated.

Why?

You seem to be acknowledging that:

• You have no contractual right to revert to a tracker;
• You fully understood how a tracker worked;
• You were not duped or misled in any way regarding the effect of the MFA; and
• The only reason the staff variable rate became less attractive than a tracker was because of a change to the tax code.

On what basis, exactly, do the 1,800 BOI staff members have justifiable right to a tracker?

The 2,096 customers had a contractual right to revert to a tracker - you apparently don't.

How could BOI have outlined the costs of giving up your tracker, bearing in mind that the staff rate was designed to be cheaper than the tracker product and was specifically advertised as being disconnected from the ECB rate?

To be blunt, it looks like you simply want to be compensated for making, what has turned out to be, a poor financial decision.

Sorry if that sounds harsh.

 

[visigoth]

I must say I am at a loss for words when I read the BOI staffers’ complaints that they also lost trackers, like a satirical film almost. One of these 1,800 could be the one who sold me a svr in mid 2008 and explained that trackers and svr are both variables, always vary together although svr reflect the ecb base rate at discretion not immediately as trackers do contractually. Yeah, right.

This loss of trackers by the BOI people only tells you that when before 2008 all products, fixed, trackers, svrs - moved together in a tight interval - nobody, whether customers, bankers, solicitors, paid any attention and all made commonsensical assumptions what contractual terms implied.

The situation is so odd if I were not affected I would laugh. It resembles an economics experiment where the price of credit does not reflect the underlying risk and instead is randomly allocated between two groups, with contractual entitlements for life, and without. And since the banks will always overprice svrs to cover their losses, we will never return to the normal pricing of risk or when all rates co-vary together again in a tight interval, for the next 15 years at least when the banks’ trackers books shrink. And who says the hard work pays and luck has nothing to do with success in life. Nah.

Paraphrasing Sarenco, to be blunt, "contractual right" defeats common sense every time.

 

[Linten]

Why?

You seem to be acknowledging that:

• You have no contractual right to revert to a tracker;
• You fully understood how a tracker worked;
• You were not duped or misled in any way regarding the effect of the MFA; and
• The only reason the staff variable rate became less attractive than a tracker was because of a change to the tax code.

On what basis, exactly, do the 1,800 BOI staff members have justifiable right to a tracker?

The 2,096 customers had a contractual right to revert to a tracker - you apparently don't.

How could BOI have outlined the costs of giving up your tracker, bearing in mind that the staff rate was designed to be cheaper than the tracker product and was specifically advertised as being disconnected from the ECB rate?

To be blunt, it looks like you simply want to be compensated for making, what has turned out to be, a poor financial decision.

Sorry if that sounds harsh.

I am not basing my argument on contractual rights, rather on consumer protection fundamentals as outlined by CBOI. Where do you read that the 2096 consumers who were returned to Tracker had a contractual right to do so? Everything I have seen in relation to this review (ref. Irish Indo 6/5/11) refers to Central Bank concerns around the need to warn consumers of the cost implications of giving up a Tracker, giving them more information, etc.. This is the comparison that I am drawing between the 2096 and the 1800 staff mortgages vis a viz the level of warning given to staff customers in losing their trackers vs the customers who ultimately had their Trackers returned to them, seemingly on the very basis of this information deficit which was pointed out to BOI by CBOI. This appears to me to be a play on Consumer Protection as espoused by CBOI, rather than any legal or contractual entitlement.
BOI had already returned many consumers to Tracker rate based on their contractual right.

PS I have just discovered that the wording of both MFAs issued in Aug 2006 and Jan 2007 is incorrect, in both cases under the 'Acknowledgement and Agreement' section. In the August one its states;
"in converting the Loan from a fixed rate to Staff Mortgage Rate"...this is incorrect as the conversion was from Tracker to Staff Mortgage Rate..
In the Jan 2007 one it states; "in converting the Loan from a Fixed rate to the Staff 2 Year Fixed Mortgage Rate"...this is also incorrect as it is converting from the Staff Variable Mortgage Rate....
Could this cause the MFAs to be considered invalid......get the Tracker back on a technicality!!

 

[Sarenco]

Where do you read that the 2096 consumers who were returned to Tracker had a contractual right to do so?

You said yourself that the 2,096 borrowers moved directly from (lifetime) trackers to the fixed rate product. There was nothing in the relevant MFAs to suggest that they wouldn't default back to the tracker on expiry of the fixed rate period.

The situation in Q3 2008 (where banks were effectively offering cheap fixed rates to borrowers in return for giving up their trackers) was completely different to the situation in August 2006 where bank staff consciously switched from a tracker to a discounted variable rate. With the benefit of hindsight that was a poor financial decision.

What consumer protection fundamental do you think the bank breached in offering discounted variable rates to staff? What warning exactly should have been given - that the Revenue BIK Reference Rate could change in the future?

 

[emeralds]

Below is the ECB rates history from 8th March 2006 to 9th July 2008. It is steadily climbing. I am guessing that Bank of Ireland were trying to assist their staff by offering a discounted variable rate not tied to the ECB rate...

2006
8 Mar. 2.50
2006
15 Jun. 2.75
2006
9 Aug. 3.00
2006
11 Oct. 3.25
2006
13 Dec. 3.50
2007
14 Mar. 3.75
2007
13 Jun. 4.00
2008
9 Jul. 4.25

 

[todo]

Everyone here can be certain that Bank of Ireland were aware of exactly what they were doing from beginning to end on this. It shocks me that they would not even look after their own staff. What chance does a customer have when they treat their staff like this.
This should be a warning to all, to stay away from Bank of Ireland. They treat their staff and customers very badly.

 

[belizebaby]

I called this number today and was told that they hope to have the investigation completed by end of 2016. Anyone who had a tracker, including staff, will be looked at and if you haven't been contacted by the end of the year you should follow up.

As an aside, the original "insite" advertisement for the staff fixed rate clearly stated that at the end of the 2 year period you would automatically revert to the staff tracker ... and then in 2008 they wouldn't honor it, so yes it was misleading and that is what the central bank have asked them to investigate. The IBOA were contacted about the 1800 staff members affected and they told us there was nothing they could do.

 

[Sarenco]

As an aside, the original "insite" advertisement for the staff fixed rate clearly stated that at the end of the 2 year period you would automatically revert to the staff tracker ... and then in 2008 they wouldn't honor it, so yes it was misleading and that is what the central bank have asked them to investigate.

That's very interesting and would appear to conflict with the terms of the MFAs for those staff members that switched to the discounted staff variable rates in 2006 before subsequently fixing. Could you post the exact wording of the advertisement?

Was there a discounted staff tracker rate in addition to the discounted staff variable rate at some point?

 

[Pelican]

I have the printout from insite titled ' an update on staff mortgage options'
The exact wording states 'Bank of Ireland no longer offers customer or staff tracker mortgages with effect from start of business on Friday 10 October 2008'

Existing Staff mortgage accounts
Staff 2 year fixed rate : rate currently 3.95%
Staff who are currently on staff 2 year fixed rate - currently 3.95 % - will roll to ECB + 0.75 % with no BIK implications as per their original signed mortgage agreement at the end of their 2 year fixed period.
Staff will receive notification 30 days prior to the end of their fixed rate period. This notification will also offer a range of fixed and variable rate products. If you do not respond to this notification, your account will automatically default to the Staff Tracker ECB + 0.75%.
I also have the letter received on rollover which states
' A communication was issued on insite on the 9th of October indicating that the Tracker Mortgage would be available on rollover - this preceded our final assessment of our withdrawal from Tracker Mortgages and represented the most accurate information available at the time. The subsequent assessment of the impact of the decision to remove Tracker mortgages has led to the outcome outlined in this letter. We apologise for any confusion this has caused.'

 

[Sarenco]

Hi Pelican

I think we already knew that BOI stopped offering trackers in October 2008.

However, Belizebaby suggested that the original "insite" advertisement (presumably from 2006 or 2007) for the staff fixed-rate mortgage stated that, at the end of the fixed-rate period, staff would automatically default to the staff tracker.

Such an advertisement would appear to directly conflict with the terms of the relevant MFAs reproduced elsewhere on this thread and could be highly relevant to this issue.

 

[Onceagain]

Thanks for posting that Pelican. It's difficult when you are still staff to do anything when it is your employer, but hopefully more and more staff are coming forward to make our case even stronger now.
We were wronged and someone has to pay for that, we are due our refunds.

 

[MAX01]

Hi Pelican
Have you sent a copy of that Insite communication to the Central Bank and also Bank of Ireland to be included in their investigations ( just in case that particular memo has disappeared!)

 

[Foxy locks]

I have the printout from insite titled ' an update on staff mortgage options'
The exact wording states 'Bank of Ireland no longer offers customer or staff tracker mortgages with effect from start of business on Friday 10 October 2008'

Existing Staff mortgage accounts
Staff 2 year fixed rate : rate currently 3.95%
Staff who are currently on staff 2 year fixed rate - currently 3.95 % - will roll to ECB + 0.75 % with no BIK implications as per their original signed mortgage agreement at the end of their 2 year fixed period.
Staff will receive notification 30 days prior to the end of their fixed rate period. This notification will also offer a range of fixed and variable rate products. If you do not respond to this notification, your account will automatically default to the Staff Tracker ECB + 0.75%.
I also have the letter received on rollover which states
' A communication was issued on insite on the 9th of October indicating that the Tracker Mortgage would be available on rollover - this preceded our final assessment of our withdrawal from Tracker Mortgages and represented the most accurate information available at the time. The subsequent assessment of the impact of the decision to remove Tracker mortgages has led to the outcome outlined in this letter. We apologise for any confusion this has caused.

Hi Pelican,
I've just come across this site and have read ur most recent post. I'm in the exact same position as u. Although I still don't know what to do or who to contact. Myself and a number of colleagues have looked everywhere for the information on onsite in relation to the 2 yr fixed staff rate with no luck. They were quick to remove the information. Is it being investigated within the bank at present or do u know?

 

[Hogmeister55]

I am one of the staff who went from a tracker to the staff variable rate in 2006, then onto the fixed rate in 2007 and not allowed back on to tracker in 2009. A colleague took a similar case to mine to the ombudsman a few years ago but that was rejected although he didn't get a very detailed response why. After that I didn't bother going ahead with my own complaint

Does anyone know are these cases being looked into again or is it just those that moved from tracker directly to fixed?

I rang the helpline number above and provided my account details but could not get a straight answer. I was told that IF I was on a tracker it would be included in the review but they would not give me a definitive yes or no that my account was being looked at.

 

[MAX01]

I am one of the staff who went from a tracker to the staff variable rate in 2006, then onto the fixed rate in 2007 and not allowed back on to tracker in 2009. A colleague took a similar case to mine to the ombudsman a few years ago but that was rejected although he didn't get a very detailed response why. After that I didn't bother going ahead with my own complaint

Does anyone know are these cases being looked into again or is it just those that moved from tracker directly to fixed?

I rang the helpline number above and provided my account details but could not get a straight answer. I was told that IF I was on a tracker it would be included in the review but they would not give me a definitive yes or no that my account was being looked at.

I am also one of the 1800 staff who lost their tracker by switching to the staff variable rate in 2006. I took my case to FSO and won it. BOI appealed the decision , but before the case was heard in the High Court, FSO contacted me to state that they were not proceeding with it. Instead, they were going to review my case again with a new team of investigators . 18 months later Bill Prafiska advised me that I had lost my case and ruled against me ! Needless to remark, I was devastated. I was awarded 1000 euro which would not cover the amount of extra money I pay every month on the variable rate. Why would FSO rule against their own Head of Legal Services who found in my favour? It is impossible to get any information from BOI regarding the review , I have heard of only one case where a customer has got their tracker returned. I suggest you write to Deloitte who are signing off on the review, also to Central Bank expressing your disquiet at lack of information given to customers. At this stage of review, the bank must have a pretty good idea as to the number of customers they have to return to trackers.

 

[Hogmeister55]

Thanks MAX01. The FSO overturning their own decisions is a bit worrying did they tell you why?
My colleague got an extremely vague response that the FSO refused to give any more detail on. He wrote to them but they didn't respond.

The person on the BOI helpline said I would only be notified if my account was reviewed and that a problem was found. Otherwise I would never hear anything. Do you know who I could in Deloitte to ensure my account is reviewed?