Brendan Burgess
Founder
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- 52,178
AIB quietly edited their website last Friday to say the following "While this case involved a number of complex issues the Bank has decided to accept the finding in full, and to apply the finding to other customers within the same cohort."
They have not issued any further information. It is not known if they are going to apply the finding exactly as it was issued, or whether they will try to get away with less. They might even go beyond the Ombudsman's finding to minimise the number of further complaints to the Ombudsman and the High Court.
So this FAQ carries a big caveat - this is what I expect to happen. But it might be different.
How do I know if I am included in the Prevailing Rate cohort?
If you got a letter from AIB in early 2018 with a cheque for €1,615, then you are included in this cohort and will get redress.
It does not matter if you appealed it or did not appeal it. It does not matter if you have since sold your house or switched lender. It does not matter that you are or that you have been in arrears.
If you got a cheque for €1,615, you are one of the lucky 5,907 impacted customers.
I still don't believe that I am included. How can I check?
If customers have any queries, they can call our dedicated Helpline on 1800 235 460 (or +353 1 7715888) between 8am and 7pm, Monday to Friday.
The Helpline will confirm that you are included but they will not be able to tell you how much you will get.
I have been told that as I drew down my mortgage after October 2008, I am not included in this group?
If you got a cheque for €1,615, you are in the group.
The October 2008 date has no relevance.
How much will I get?
Assuming that AIB follows the Ombudsman's decision.
There are two parts to the Ombudsman's decision:
1) Reduction on your mortgage balance
Your mortgage balance today will be reduced by 12% of the balance owing when your first fixed rate ended.
If your mortgage was €100k in July 2011, your mortgage today will be written down by €12k.
So if your mortgage balance today is €62k , they will write it down by €12k and you will only owe €50k
2) You will receive a refund of the interest you paid on the €12k capital write down.
This is a long complicated calculation, but my rule of thumb is that it will be about 4% of the mortgage balance on the date the fixed rate ended.
So if you had a mortgage of €100k in July 2011, you will get a cash payment of €4,000
I must stress that the 4% estimate is my figure. It could be a bit more or a bit less depending on what date your fixed rate ended and what interest rate you were on. I would say that 90% of borrowers will be between 3% and 5%.
Will the €1,615 be deducted from the redress?
No. The Ombudsman directed that it be paid in addition to the redress.
Under the other schemes, borrowers got 15% of the overcharge as compensation for stress. Will we be getting this as well?
The Ombudsman made no provision for such compensation. AIB might choose to pay it to head off claims.
What can I do if I am not happy with the redress scheme?
You can make a complaint to the Ombudsman. However, as he has ruled on this case, he is unlikely to change his ruling.
You can take a complaint to the High Court.
When will I get it?
AIB will write to you and presumably pay you the redress in "July or August"
Do I need to do anything to get it?
No it will come out to you automatically.
Can I take cash instead of the write-down?
No.
I came out of a fixed rate before they had withdrawn trackers and fixed again. What is the relevant date for the calculations?
Say your first fixed rate ended in March 2008. You were offered a tracker, but you fixed for three years, which expired in 2011.
AIB complied with their contractual obligations in March 2008.
But they broke their contract with you in March 2011, so that is the relevant date for the calculations.
Will I be getting a tracker mortgage from now?
The Ombudsman did not direct AIB to put the borrower on a tracker mortgage for the rest of her term.
So if AIB follows the Ombudsman's decision, they will not offer you a tracker mortgage.
However, if AIB has any common sense, they would offer customers a tracker rate of 1.5% to avoid dragging this out through the courts for many years to come. But AIB has shown no common sense to date, so I don't expect them to do so now. The Central Bank might encourage them to do so.
What will happen to customers currently in arrears?
The reduction in balance by 12% would represent about two years payments, so in most cases, this will wipe out any arrears on your account.
They have not issued any further information. It is not known if they are going to apply the finding exactly as it was issued, or whether they will try to get away with less. They might even go beyond the Ombudsman's finding to minimise the number of further complaints to the Ombudsman and the High Court.
So this FAQ carries a big caveat - this is what I expect to happen. But it might be different.
How do I know if I am included in the Prevailing Rate cohort?
FAQ - What are the criteria for qualifying for the Prevailing Rate redress?
Hi Brendan I have contacted AIB in the past & they have told me that i'm not eligible for any redress, I have never received a letter or the €1,615 compensation. I was never on a tracker mortgage my initial drawdown was in January 2007 when I was offered a tracker but I opted for a 3 year fixed...
www.askaboutmoney.com
If you got a letter from AIB in early 2018 with a cheque for €1,615, then you are included in this cohort and will get redress.
It does not matter if you appealed it or did not appeal it. It does not matter if you have since sold your house or switched lender. It does not matter that you are or that you have been in arrears.
If you got a cheque for €1,615, you are one of the lucky 5,907 impacted customers.
I still don't believe that I am included. How can I check?
If customers have any queries, they can call our dedicated Helpline on 1800 235 460 (or +353 1 7715888) between 8am and 7pm, Monday to Friday.
The Helpline will confirm that you are included but they will not be able to tell you how much you will get.
I have been told that as I drew down my mortgage after October 2008, I am not included in this group?
If you got a cheque for €1,615, you are in the group.
The October 2008 date has no relevance.
How much will I get?
Assuming that AIB follows the Ombudsman's decision.
There are two parts to the Ombudsman's decision:
1) Reduction on your mortgage balance
Your mortgage balance today will be reduced by 12% of the balance owing when your first fixed rate ended.
If your mortgage was €100k in July 2011, your mortgage today will be written down by €12k.
So if your mortgage balance today is €62k , they will write it down by €12k and you will only owe €50k
2) You will receive a refund of the interest you paid on the €12k capital write down.
This is a long complicated calculation, but my rule of thumb is that it will be about 4% of the mortgage balance on the date the fixed rate ended.
So if you had a mortgage of €100k in July 2011, you will get a cash payment of €4,000
I must stress that the 4% estimate is my figure. It could be a bit more or a bit less depending on what date your fixed rate ended and what interest rate you were on. I would say that 90% of borrowers will be between 3% and 5%.
Will the €1,615 be deducted from the redress?
No. The Ombudsman directed that it be paid in addition to the redress.
Under the other schemes, borrowers got 15% of the overcharge as compensation for stress. Will we be getting this as well?
The Ombudsman made no provision for such compensation. AIB might choose to pay it to head off claims.
What can I do if I am not happy with the redress scheme?
You can make a complaint to the Ombudsman. However, as he has ruled on this case, he is unlikely to change his ruling.
You can take a complaint to the High Court.
When will I get it?
AIB will write to you and presumably pay you the redress in "July or August"
Do I need to do anything to get it?
No it will come out to you automatically.
Can I take cash instead of the write-down?
No.
I came out of a fixed rate before they had withdrawn trackers and fixed again. What is the relevant date for the calculations?
Say your first fixed rate ended in March 2008. You were offered a tracker, but you fixed for three years, which expired in 2011.
AIB complied with their contractual obligations in March 2008.
But they broke their contract with you in March 2011, so that is the relevant date for the calculations.
Will I be getting a tracker mortgage from now?
The Ombudsman did not direct AIB to put the borrower on a tracker mortgage for the rest of her term.
So if AIB follows the Ombudsman's decision, they will not offer you a tracker mortgage.
However, if AIB has any common sense, they would offer customers a tracker rate of 1.5% to avoid dragging this out through the courts for many years to come. But AIB has shown no common sense to date, so I don't expect them to do so now. The Central Bank might encourage them to do so.
What will happen to customers currently in arrears?
The reduction in balance by 12% would represent about two years payments, so in most cases, this will wipe out any arrears on your account.