AIB AIB accused of concocting 7.9% rate

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dazbc14

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From the Irish Times

https://www.irishtimes.com/business...9-tracker-rate-to-suit-redress-aims-1.3440615

AIB accused of concocting 7.9% tracker rate to suit redress aims

"AIB has been accused of concocting a notional tracker mortgage rate of 7.9 per cent for some 4,000 customers caught up in the tracker controversy.

The bank recently included these customers in its redress scheme under pressure from the Central Bank of Ireland.

While the bank admits the customers were wrongly denied the option of switching to a tracker contract when their fixed-rate contracts expired in 2009, it claims the “prevailing” tracker rate that they would have been entitled to was 7.9 per cent due to high funding costs. This is significantly higher than the prevailing variable rate at the time."


Will be interesting to see what comes out of this and may shape our appeal.
 
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[broken link removed] finance spokesman Michael McGrath has called on the Central Bank to “robustly challenge” this interpretation.


“A 7.9 per cent tracker mortgage rate never existed,” Mr McGrath said. “It has been manufactured to enable AIB to reach the conclusion that these customers suffered no loss.


“If the spirit of the Tracker Mortgage Examination is to be upheld, where the bank breaches the terms of the contract, the interpretation of contractual clauses should favour the customers.”


“The 7.9 per cent rate is a concoction and it needs to be vigorously challenged by the Central Bank,” Mr McGrath said.
 
The only tracker margin that AIB should be allowed to charge these impacted customers is the last available tracker margin that was quoted by the bank the day prior to AIB’s tracker mortgage product withdrawal. It is no coincidence that they withdrew tracker products circa October 2008, around the same time that the ECB announced to the markets, an easing in global monetary policy. (i.e. the ECB base rate would decrease significantly)
 
In my opinion, as a general appraisal in relation to this whole debacle, the Central Bank has and continues to be useless, rudderless, toothless and a whole pile of other lesses also....
 
elacsaplau said:
In my opinion, as a general appraisal in relation to this whole debacle, the Central Bank has and continues to be useless,
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Hi elacs

I raised the 3.69% issue with AIB on a number of occasions. They were very clear. Customers did not lose out as even if they had been offered a tracker, it would have been far higher than the SVR. I asked them if they were going to write to their customers telling them this and they said that there was no point in doing so.

The Central Bank has forced a change in mind. They got AIB to write to 4,000 customers. Each one has now received €1,615. They can now use the Appeals Process and they can to the FSO. And if enough of them pool their €1,615, they can go to the High Court.

So as with the Tracker issue in general, the Central Bank has actually achieved a huge amount which would not have been achieved by individuals acting on their own.

Brendan
 
Brendan,

I specifically said as a general appraisal by which I meant not universally bad - of course, they have helped to a point.

Padraic Kissane has often applauded elements of the Central Bank's work also - presumably he, too, has his reasons.

As a rule, the Finance Committee has been highly critical of the Central Bank's performance and I'm with them on this one.
 
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elacsaplau said:
I specifically said as a general appraisal by which I meant not universally bad - of course, they have helped to a point.
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If you want to discuss the general so...

I would say that the courts would award return of trackers in about 10% of cases, if borrowers had gone to the courts.

The CB has done a great job. They have reopened the Financial Services Ombudsman's cases.

They were slow to get going. They are playing a stormer now - in general and in the specific.

Brendan
 
That's your opinion, Brendan

Do you accept that the Board of the Central Bank has been critical of the bank's performance?

Do you accept that the Finance Committee has been critical of the bank's performance?
 
Brendan Burgess said:
If you want to discuss the general so...

I would say that the courts would award return of trackers in about 10% of cases, if borrowers had gone to the courts.

The CB has done a great job. They have reopened the Financial Services Ombudsman's cases.

They were slow to get going. They are playing a stormer now - in general and in the specific.

Brendan
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Patrick Honohan, ex Governor of the Central Bank of Ireland, said on record, that the was no tracker mortgage issue in Ireland. Nothing to see here, run along. Sheer pressure from you, Patrick Kissane and other consumer advocates have forced the Central Bank's hand, particularly when the issue became a political football. Bill Prasifka ex FSO should also hang his head in shame with some of the previous FSO decisions on tracker mortgage issues, he should be summonsed before the PAC.
 
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elacsaplau said:
Do you accept that the Board of the Central Bank has been critical of the bank's performance?
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These are their exact words, so do judge for yourself

In the discussion that followed, members noted the level of resources devoted to the
Examination had increased only in very recent times, and emphasised the importance now to
fully identify the extent of the issue and ensure it was addressed in as thorough and timely a
fashion as possible. Notwithstanding this, members acknowledged the high quality work that
was being put into this by the staff; the focus the Bank had on consumers; and the challenging
communications environment. In relation to communications, members considered that the
strategy was flawed and queried whether in retrospect a different strategy might have been
deployed based on what subsequently emerged; particularly post the Oireachtas Committee
appearance. Other members referenced the importance of the Bank communicating in different
ways to a wide range of stakeholders and through local as well as national media and via social
media. It was also considered important to emphasise the data around the issue and the fact that
the Bank was delivering a positive outcome for consumers. Clarity in messaging and the
channels utilised was also emphasised. On the progress of the Examination itself, among the
issues raised by members were, whether the Bank could assist consumers in pursuing redress
in disputed cases, for example by providing certain information to them; what role the SSM
had to play in the issue; the levels of provisioning being applied in the lenders to address this;
issues concerning enforcement actions; the need for any further legislative change; and the
ability of the Bank to ensure appropriate redress and compensation was paid.




elacsaplau said:
Do you accept that the Finance Committee has been critical of the bank's performance?
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Of course I do. But what would you expect from a Committee of politicians?

The people most involved such as Padraic Kissane and myself have given a much broader assessment.

And, of course, there are things which are still wrong. The Appeals procedure is ridiculously complicated and the Central Bank does not allow the lenders to sort the issues out directly.

I am one of the biggest critics of the Central Bank e.g. their misleading reports on mortgage rates in Ireland. But when they do a good job, I will say so.

Brendan
 
Brendan Burgess said:
These are their exact words, so do judge for yourself

In the discussion that followed, members noted the level of resources devoted to the
Examination had increased only in very recent times, and emphasised the importance now to
fully identify the extent of the issue and ensure it was addressed in as thorough and timely a
fashion as possible. Notwithstanding this,.....
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Absolutely - this is bureaucratic speak, if ever I heard it. In regular English, it can be translated as: "we were unbelievably slow in reacting here but we more or less get it now."

Yes let's indeed - pass the canapés there please - identify the extent of the issue and ensure it is addressed in as thorough and timely fashion as possible. We've only been at it x years (actually lost count). Brendan - you may get a sense of urgency here but I certainly don't.

Brendan Burgess said:
But what would you expect from a Committee of politicians?
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The Finance Committee has done excellent work - better that you acknowledge this than taking a cheap swipe if indeed your modus operandi is to acknowledge good work when you see it.
 
elacsaplau said:
The Finance Committee has done excellent work - better that you acknowledge this
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Unfortunately, I can't agree with this.

Look back at the meetings. I have done summaries of many of them here.

There was good questioning from Michael McGrath and some good questioning from Pearse Doherty.

But a lot of it was roaring and shouting and accusing the banks of theft without producing one whit of evidence. They were generally unable to distinguish between criminal behaviour, breach of contract and disagreement over contract terms.

They were playing to the public a lot of the time.

Their attacks on the Central Bank were particularly unfair.

Brendan
 
Brendan Burgess said:
Hi elacs

I raised the 3.69% issue with AIB on a number of occasions. They were very clear. Customers did not lose out as even if they had been offered a tracker, it would have been far higher than the SVR. I asked them if they were going to write to their customers telling them this and they said that there was no point in doing so.

The Central Bank has forced a change in mind. They got AIB to write to 4,000 customers. Each one has now received €1,615. They can now use the Appeals Process and they can to the FSO. And if enough of them pool their €1,615, they can go to the High Court.

So as with the Tracker issue in general, the Central Bank has actually achieved a huge amount which would not have been achieved by individuals acting on their own.

Brendan
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Brendan,

Look at the particular AIB mortgage clause again with fresh eyes; study it. “prevailing tracker rate” means the current tracker rate available. Tracker mortgages were withdrawn by AIB in late 2008 so there was no prevailing tracker rate available when these customers came off their fixed rate.

Therefore, the only prevailing tracker mortgage rate that AIB could possibly apply to these impacted customers mortgage accounts was the last tracker rate margin above the ECB rate, that was quoted by the bank, the day prior to the product’s withdrawal.
 
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The definition as to what constitute AIB's "prevailing rates" for the purposes of this condition –

"…prevailing rates means the interest rates then current and available at the date that a customer's fixed rate period expires".

However Tracker rates were not available, so AIB’s cost of funds at the time the fixed rate period ends is irrelevant.
 
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IdesofMarch said:
Look at the particular AIB mortgage clause again with fresh eyes;
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I think you are misreading my posts - or maybe I have expressed my self badly.

I have always argued that AIB's interpretation is incorrect and that the prevailing rate cannot be set 8 years later. I have argued that on radio and TV, with the Central Bank, directly with AIB and probably in newspaper articles and at the AIB AGM.

https://www.askaboutmoney.com/threa...-when-trackers-were-no-longer-offered.199878/

https://www.askaboutmoney.com/threa...vailing-rate-when-no-rate-specificied.196770/

Brendan
 
Brendan, it is very clear that the CBI and AIB are wrong, customers did lose out and lose out big time. Their contractual rights under the loan agreement were interfered with (unilaterally) by the bank due to the withdrawal of tracker mortgage products (breach of contract). As a consequence of this action by the bank, there was no longer a (prevailing), current and available tracker rate for borrowers to choose from. Therefore the bank cannot seek to rely what the bank's cost of funds would have been at the point in time when the respective borrower came off their fixed rate, as only prevailing tracker rate that the banks can utilise (due to their own unilateral actions) is the bank's last available tracker rate prior to the products withdrawal.
 
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Brendan ,
Re the 10 % success in court mentioned , Do you feel so that a group of us going together to the High Court to challenge AIB on this " prevailing tracker rate " issue would have a poor chance of success ?? Thanks
 
Greenbean said:
Do you feel so that a group of us going together to the High Court to challenge AIB on this " prevailing tracker rate " issue would have a poor chance of success ??
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Hi Greenbean

The 10% refer to the majority of people who got trackers although they had no contractual right.

The AIB case is very different. AIB has admitted that they should have offered a tracker and that they were wrong not to.

The only issue at stake is whether they have the right to set the prevailing rate 8 years later at a rate of their choosing. It seems wrong to me but you can be quite sure that they have submitted their arguments and counsel's opinion to the Central Bank.

If I were such a customer, I would be pitching in my €1,615 into a pool and going to the High Court. The Court is unpredictable. AIB is very sure that they are right. Ides of March is very sure that they are wrong. I think that AIB is wrong, but as in any High Court case it could go either way.

Brendan
 
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