Apologies and a few thousand euro are not enough

I have an opinion piece in today's Indo:

Apologies and a few thousand euro are not enough


In 2009, PTSB removed trackers from 1,372 borrowers because they broke out of their fixed term early. PTSB argued that while their mortgage agreement entitled them to a tracker on expiry of the fixed term, they lost this by breaking out early.

A number of these borrowers disputed the loss of their tracker and made complaints to the Ombudsman during 2010 and 2011. The Ombudsman upheld most of these complaints and directed PTSB to restore their trackers. PTSB appealed the cases to the High Court and Justice Hogan's decision in September 2012 was damning on PTSB.

"This, undoubtedly, is a sophisticated and clever argument which, for example, had it been advanced in an undergraduate law examination would have attracted high praise from the examiners as an original demonstration of legal craft and skill. But this type of argument should really have no place in the construction of financial documents involving retail customers."

Despite this clear judgment, PTSB initiated an appeal to the Supreme Court, thus putting all affected cases on hold. For a further three years, they continued to charge the inflated SVR rate.

The Central Bank only began its enforcement investigation in June 2014. And borrowers had to wait a further year before the refunds were announced. And even still, the Central Bank has not published the results of its enforcement investigation.

How many people lost their homes since this "sophisticated and clever argument" was struck down by the High Court?

How many people have lost their homes since the Central Bank woke up in June 2014? Did the Financial Services Ombudsman alert the Central Bank to a systemic problem when they ruled on the first few cases back in 2010? If they did, why did it take them four years before taking any action?

The six years between the loss of the tracker and its restoration is a very long time. During that period many people made huge financial sacrifices to try to keep up to date with their mortgage repayments. Most struggling borrowers worried about arrears and losing their home. They cut back on other essential expenditure in order to meet their mortgage repayments. The average refund is €22,400.

That is a huge amount for families to sacrifice. Affected borrowers have claimed that the financial pressure has caused ill health, depression and marital strains. How can €3,500 compensate for that?

And there are many other questions to answer. 358 customers will be restored to a tracker rate of 3.3pc or above. Did the Central Bank approve that rate? What about borrowers, who were entitled to trackers, who switched from Permanent TSB because of the high standard variable rate? How will they be compensated for the life-long loss of a tracker?

What about borrowers who overpaid their mortgages because of the very high rate? If they had cheap trackers, they would probably not have overpaid their mortgages?

And what exactly is the Central Bank's Enforcement Action investigating?

Banks make mistakes. Banks and customers interpret clauses differently. In 2010, Bank of Ireland restored trackers to 2,000 people with no need for an Enforcement Investigation.

Also in 2010, PTSB restored trackers to 300 people, again without an Enforcement Investigation. The fact that an Enforcement Investigation is taking place suggests that the problem goes beyond a simple mistake or a difference of interpretation.

If it was a simple error and there was no deliberate wrongdoing, then there should be no fine.

But if the Central Bank finds that there was a deliberate campaign to deprive people of their trackers or that Permanent TSB engaged in delaying tactics to exploit the statute of limitations, then punitive damages should be levied on Permanent TSB and paid to the borrowers.

Apologies and €3,500 are not enough.

Brendan Burgess is the founder of the consumer forum askaboutmoney.com

Irish Independent

Brilliantly written piece Brendan, thank you so much for always standing up for us and for what is fair and just.

Brendan Burgess said:

The fact that an Enforcement Investigation is taking place suggests that the problem goes beyond a simple mistake or a difference of interpretation.

If it was a simple error and there was no deliberate wrongdoing, then there should be no fine.

But if the Central Bank finds that there was a deliberate campaign to deprive people of their trackers or that Permanent TSB engaged in delaying tactics to exploit the statute of limitations, then punitive damages should be levied on Permanent TSB and paid to the borrowers.

Apologies and €3,500 are not enough.

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It is my opinion that things like this don't happen by accident and it was a delibarate policy of the bank. That is why they encouraged people into the fixes etc. to get them out of their trackers. As I stated on here, a long time ago now, the only way to find out what went on is to get the minutes of the meetings that were held about offering the cheap fixes or variables. Someone somewhere discussed this and implemented it. A whistleblower might also come forward.

50K to people who have lost their homes is derisory. Especially if there has been marital breakups or worse, suicides.

As for the 3K compensation, totally unacceptable.

As for the Central Bank, where is their report !

On their website it states we can take what they are offering without affecting our right to appeal or appeal through legal means. That is what I will do. At this stage I need my money back but I am not afraid to continue on the road to get the compensation we deserve.

Ciarán Hancock in the Irish Times reaches a similar conclusion

PTSB offers rehearsed response and paltry amends to the wronged

The financial compensation is paltry when you consider the stresses and strains that these people must have endured. They have lost their homes and by extension their dignity. They’ve also had their credit records destroyed by a State-owned bank.

At a press conference yesterday, PTSB chief executive [broken link removed] didn’t have the words to describe how this made him feel.

Masding took over PTSB in January 2012. In his own words, the bank had “major problems” and was “badly broken” before his time. Its “standards fell well short” of what was expected.

Masding said accountability and responsibility have been “core values” at PTSB since he took charge. “When mistakes are made we put them right,” he told the media.

And yet it took an enforcement investigation by the [broken link removed] in the middle of last year to give the bank pause for thought on this matter.

...

Masding had prepared answers for practically all the questions asked of him yesterday by the media. His opening script had three reminders scribbled in the top right hand corner: “serious, controlled, no smile”. This announcement was carefully rehearsed.

If "accountability and responsibility" are their core values, why did he allow the bank under his charge pursue these tracker cases to the Supreme Court until this year? He should be fired. Shame on the Central Bank too. They are all a disgrace.

Well written Brendan and agree with Bronte....(suicides, family and marital breakups...scary)

Brendan Burgess said:

Masding had prepared answers for practically all the questions asked of him yesterday by the media. His opening script had three reminders scribbled in the top right hand corner: “serious, controlled, no smile”. This announcement was carefully rehearsed.

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three reminders scribbled in the top right hand corner: “serious, controlled, no smile”.

There's more of it.

BB do you know what way PTSB are dealing currently with customers in arrears etc, are they being helpful etc.

I guess expert poster Padraic Kissane might also clarify this. Just want to know if they really have got their act together or not. The level of compensation of just over 3K does not strike one as in any way an amount that would compensate for years of hell and stress.

Well written Brendan. I didn't think I would be shocked at banks carry on anymore but it amazes me that a a State owned bank was allowed to carry on like this and our Central Bank were once again shown to be toothless.

I can't imagine how stressful this has been for the people involved. Really disgraceful stuff.

Well done Brendan and thank you so much for speaking up for us. This forum has been a Godsend!!! Has anybody come forward to speak to the media?

matan said:

Has anybody come forward to speak to the media?

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Hi matan

I got a couple of people prepared to speak anonymously and one booked in to talk to a radio programme.

I am always looking for more if you are on?

Especially someone who has lost their home.

Brendan

Great Article Brendan...there is plenty of anger out there even from those not directly affected...a real anger that this was allowed to happen and a scepticism that this is the last of this type of hookery from then banks...I for one that level of compensation is inadequate for the stress involved...I feel very sad for those that lost their homes and mentioned this on Drivetime yesterday...i cannot see how you can fix this without some serious examination from independents not connected to the bank...we need some US style punitive damages to ensure this doesnt happen again...for me €3500 couldnt come close to compensating for the pressure worry and stress caused over this time.

Not yet brendan maybe when i get my letter not sure. Would love to hear somebody who has lost their home, €50k is such an insult to those poor families!!

Quick question..when the average redress of 25000 is quoted what amount of mortgage is that average being based on does anyone know?

I just wanted to offer my own congratulations to Brendan for a superbly composed article and to all concerned for finally gaining some traction on this issue.

I recently refreshed my memory of Justice Hogan's judgment in this matter and it is incredible to me that PTSB continued to try and assert such a strained interpretation of their loan documentation to justify their position. To describe it as a "sophisticated" construction is putting it very politely.

Was PTSB's Supreme Court appeal taken in good faith or was it a tactical ploy to "run down the clock" to time bar claims?

You would also have to despair at the length of time that appears to have passed before the Central Bank initiated its investigation on this matter.

We deserve better.

"Banks make mistakes. Banks and customers interpret clauses differently. In 2010, Bank of Ireland restored trackers to 2,000 people with no need for an Enforcement Investigation.

Also in 2010, PTSB restored trackers to 300 people, again without an Enforcement Investigation. The fact that an Enforcement Investigation is taking place suggests that the problem goes beyond a simple mistake or a difference of interpretation."

Hi Brendan,

Well done on the article and all the advice, help and support you, and many other site contributors have offered to thousands of people in this long running tracker scandal with PTSB and indeed, with serious tracker anomalies from other banks.

Can I ask whether Bank of Ireland offered compensation to the 2,000 people whom trackers were restored to in 2010? Or were they merely refunded the overpayment?

Again, were the 300 PTSB customers adequately compensated in 2010 when their trackers were restored?

In my case, Ulster Bank placed me on a variable rate for 6 years following the end of a fixed rate period in 2008. I should have been put on my tracker rate at the end of this fixed rate period, as was stated in my loan offer. I was refunded circa €30,000 by Ulster Bank recently. They refunded me the money that I had overpaid, this was my money!! I was offered no compensation.

I also paid a substantial sum to an advisor to take the case on my behalf to Ulster Bank. In doing do, it was money well spent as I had a fear of potentially not representing myself adequately enough with the bank and hence run the risk of losing my case. While he brought my case to a satisfactory conclusion with Ulster Bank re restoring my tracker and refunding any overpayments, had Ulster Bank not overcharged me in the first place, I wouldn't have had this expense.

Should Ulster Bank have compensated me? I'd be grateful to hear your thoughts.

diver said:

Can I ask whether Bank of Ireland offered compensation to the 2,000 people whom trackers were restored to in 2010? Or were they merely refunded the overpayment?

Again, were the 300 PTSB customers adequately compensated in 2010 when their trackers were restored?

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To the best of my knowledge, these borrowers just got a refund of the overcharged and no compensation.

In general, that is what happens - no compensation. I heard at second hand of a borrower taking a case to the FSO and it was long drawn out, before the lender pulled the case. The tracker was restored in full and a full refund of the overcharge was made. The bank paid an ex gratia settlement of, I think,€3,000 to compensate for all the hassle.

Brendan

Good article Brendan I really don't think this was a systems failure PTSB were loosing a lot on their mortgage book their offers of enhanced paydowns on their tracker books shows that. By doing what they did they put more into difficulty than could have been.They created the Moral Hazard and its time the chickens come home to roost with some exemplary damages