Bank of Ireland Bank of Ireland Staff- Lost Tracker

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Pelican

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That MFA doesn't say whether or not you are entitled to revert to a tracker on the expiry of the Staff Fixed Mortgage.

What does the MFA that you signed in August 2006 (when you switched from your tracker) say?

Incidentally, the wording above suggests that you switched from a fixed rate mortgage to a Staff Fixed Mortgage in January 2007, whereas your earlier post suggested that you switched from a tracker to a Staff Variable Mortgage in August 2006 - did you also switch from a Staff Variable Rate to a fixed rate mortgage at some point between August 2006 and January 2007?

You have to read the original loan agreement and any subsequent MFAs together.
I switched from a staff variable rate to a staff fixed rate in January 2007. There was no other change in between.
 
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HelpingHand

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I agree with Sarenco's last post. However, in relation to the last line in para 2 of the posted MFA wording referring to tracker rates, which states " In the event that, or at any time the Repo rate is certified by Bank of Ireland Mortgages to be unavailable for any reason, the interest rate applicable to the loan shall be the prevailing Home Loan Variable Rate," can be interpreted as requiring BOI to certify a reason as to why the REPO rate is unavailable, before the bank can default the mortgagor to the bank's prevailing home loan variable rate. Did this happen ? Did the bank formally attest a reason for the repo rate being unavailable?
 
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Deiseblue

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As Brendan suggested in another thread it might be an idea if the IBOA were asked to take an interest in this matter.
Obviously if a cadre of affected members ( obviously they are not going to deal with non members )were to approach the Union in this regard perhaps progress could be made.
 

Sarenco

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Yes, if the loan is to be converted to a tracker.

Not the same thing as saying that a borrower is entitled to convert the loan to a tracker.
 

Pelican

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The following is the MFA to convert to the Staff Variable in August 2006.

Clause 1 Refers to the funding sum liable for breaking out of a fixed rate.

Clause 2. Refers to ceasing to be employed by Bank of Ireland.

The exact wording for the other clauses are as follows

3. In converting the loan to a Staff Mortgage loan, I agree that the interest rate applicable to the loan is a variable interest rate and may vary upwards or downwards. The rate shall be the higher of the following two key indicators (1) the prevailing Revenue Commissioners BIK ( benefit in kind) reference rate (2) the one month Cost of Funds reference rate (which is equivalent to the one month EURIBOR rate issued by Bank of Ireland Global Markets on a daily basis). In the event that the Staff Mortgage Rate is certified by the Society to be unavailable for any reason the interest applicable to the loan shall be the prevailing Home loan Variable rate. Notification of any change in the interest rate with condition 6(b) of The General conditions of my original offer letter.

4. Condition 6(c) of the general conditions of my Original Offer Letter is not applicable for the duration of the loan when the interest rate is the Staff Mortgage rate.

5.Save as set out in this form of Authorisation all the terms and conditions applicable to the loan remain unchanged.

The original loan agreement signed in December 2004 states

Condition 6(b). The lender shall give notice to the borrower of any variation in the interest rate applicable to the loan,either by notice in writing served on the borrower in accordance with clause 1(c) or by advertisement published in one national daily newspaper. Such notice or advertisement shall state the variable interest rate and the date from which the varied interest rate will be charged.

Condition 6(c) notwithstanding anything else provided in this Offer Letter, the varied applicable interest rate shall never, in any circumstances, be less than 0.1 per cent over one month's money at The Euro Inter Bank Offered Rate (EURIBOR)

The original loan agreement also states
The interest rate applicable to the loan is a variable interest rate and may vary upwards or downwards. The interest rate shall be no more than 0.95 per cent above the European Central Bank Main Refinancing Operations Minimum Bid Rate (Repo Rate) for the term of the loan. Variation in interest rates shall be implemented by the lender not later than close of business on the 5th working day following a change in the Repo rate by the European Central Bank. Notification shall be given to the borrower of any variation in interest rate in accordance with general condition 6(b) of this offer letter. In the event that,or at any time the Repo rate is certified by the Lender to be unavailable for any reason the interest rate applicable shall be the prevailing Home Loan Variable Rate.
 

Sarenco

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Thanks for the follow up Pelican.

It seems fairly clear from the August 2006 MFA that you agreed to switch from your original tracker rate to a Staff Mortgage Loan variable rate for the balance of the term of the loan and, on the basis of what you've posted, there doesn't appear to be any contractual entitlement to switch or default back to the original tracker rate.

Taking all the relevant clauses together (from the original loan agreement and the two subsequent MFAs) it seems to me that you should have reverted to the Staff Variable Mortgage Rate at the end of the fixed term. Is that the rate you are currently paying?

According to Revenue's website, the current Revenue Commissioners BIK reference rate for qualifying home loans is 4%. That is obviously higher than one month EURIBOR so would appear to be the applicable rate.

You could, of course, complain to the FSO and/or the Central Bank or that you did not fully appreciate the implications of signing the MFA in August 2006 or that you were somehow tricked into signing the MFA. However, I wouldn't be overly confident that the Central Bank or FSO would accept that a bank employee would not have appreciated the distinction between the two products.

Best of luck if you do decide to proceed with a complaint.
 

Pelican

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Thanks Sarenco. Did revert to staff variable rate. No longer bank staff so now on SVR.
 

Sarenco

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No problem Pelican. That's a tough break the way things panned out.

Have you considered fixing with BOI or is there any possibility of refinancing with another lender?
 

Sarenco

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Actually, just a thought, but what exactly does Clause 2 of the MFA say? Does it specify what rate you revert to if you cease to be a BOI employee?
 

Pelican

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Have a decent LTV rate of 3.9 at the moment. I know the fixed rates are lower but am reluctant to change in case I do not get the same LTV at the end of the fixed period. Was also hoping there would be a decrease in SVR. Clause 2 re ceasing to be staff is exactly as quoted i in clause 1 of MFA when fixing in 2007.
 

Sarenco

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Clause 2 re ceasing to be staff is exactly as quoted i in clause 1 of MFA when fixing in 2007.
That's a pity - I was hoping the Clause might have defaulted you back to the rate in your original loan offer (in this case the tracker rate).

3.9% is BOI's variable rate for LTVs of 60% and lower. With such a low LTV, you should get a better variable rate than that if you switched provider.
 

Brendan Burgess

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3. In converting the loan to a Staff Mortgage loan, I agree that the interest rate applicable to the loan is a variable interest rate and may vary upwards or downwards. The rate shall be the higher of the following two key indicators (1) the prevailing Revenue Commissioners BIK ( benefit in kind) reference rate (2) the one month Cost of Funds reference rate (which is equivalent to the one month EURIBOR rate issued by Bank of Ireland Global Markets on a daily basis). In the event that the Staff Mortgage Rate is certified by the Society to be unavailable for any reason the interest applicable to the loan shall be the prevailing Home loan Variable rate. Notification of any change in the interest rate with condition 6(b) of The General conditions of my original offer letter.
Thanks for posting this Pelican. It seems absolutely clear to me.

You were consciously giving up your tracker to avail of this other rate.

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.

In 2006 it seems that 1,800 staff of Bank of Ireland did not appreciate the value of trackers.

The only possible argument you might have is if you had any evidence that BoI had a deliberate strategy to get people off their trackers. If the CB were to find that this was a deliberate strategy,then they should be obliged to put all the staff back on trackers.

Brendan
 

emeralds

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In 2006 the ECB Rate was steadily climbing. It may have seemed very attractive to fix during that period. And nobody could have foreseen what would happen a couple of years later..
 

twofor1

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Would there be any merit in taking a complaint to the FSO, and asking for the complaint to be considered with reference to Section 57CI (2) (c) of the Central Bank and Financial Services Authority of Ireland Act 2004, which states:

(2) A complaint may be found to be substantiated or partly substantiated only on one or more of the following grounds:

(c) although the conduct complained of was in accordance with a law or an established practice or regulatory standard, the law, practice or standard is, or may be, unreasonable, unjust, oppressive or improperly discriminatory in its application to the complainant;

Page 51 here; https://www.financialombudsman.ie/documents/legislation_pg_30_57.pdf

My admittedly uneducated reading of this is, even if BOI are within their rights, if the FSO considers it unreasonable or unjust, then he can find in favour of the complainant.
 

Brendan Burgess

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But why is it unreasonable or unjust?

If this happened against a few BoI borrowers who were uneducated in the ways of banking, they might have a case.

But I can't see how 1,800 professional bankers could argue this. It leads me to think that when this happened, it was not a deliberate strategy by the lender.

Brendan
 

Underdog

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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.
 

Monbretia

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But did anyone know in 2006 the implications of giving up a tracker? Hindsight is why we all now know that it was valuable. That memo is actually suggesting it was a benefit to give it up as the rate offered was not linked to ECB which it says was predicted to rise. If that was the prevailing thinking that rises were coming then who could have forseen how valuable the tracker would become and how could they have warned on that if no one realised it?
 

emeralds

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Exactly. We have a tracker mortgage (since 2005) and in 2006 we were giving serious consideration to fixing given the seemingly inexorable climb in the ECB Rate. In fairness I don't think anybody could have seen what was coming down the track two years later...
 

Sarenco

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But why is it unreasonable or unjust?

If this happened against a few BoI borrowers who were uneducated in the ways of banking, they might have a case.

But I can't see how 1,800 professional bankers could argue this. It leads me to think that when this happened, it was not a deliberate strategy by the lender.

Brendan
Absolutely agree that the timing here is key. If this happened in the third quarter of 2008, then different considerations might apply but in August 2006, BOI, like all lenders, was still offering trackers to new customers so it is very difficult to see that there was any deliberate strategy at play here.

Surely bank staffers didn't need any education as to how trackers worked? As Monretia points out, the fact that the Staff Variable Rate was divorced from the ECB rate was actually emphasised as a benefit of the product.
 

Sarenco

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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.
Absolutely agree.

The argument that a reference to a variable rate in this context should be interpreted as a reference to a tracker rate at an unspecified margin over an unspecified reference rate seems wholly fanciful to me.
 
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