Can the Central Bank therefore do something about this as it seems an unfair result
Previous redress has tended to give the customer a cash payment though. So there is a difference here. Personally I don't have a problem with the money being taken off the capital rather than coming as a lump sum but I can understand that wouldn't be the case for everyone. The bank were at fault so the customer should have the option. The bigger issue for me is being put back onto a tracker for the reasons I outlined elsewhere. It is a great result but it does leave a sour taste that AIB couldn't just admit fault and go the whole way.Say you had a mortgage of €300k when you rolled off the fixed rate. Say your mortgage is down to €256k now.
You will get a write down of €36k.
So your mortgage will be €220k
If you want cash, switch to another lender and borrow €256k
Brendan
Unfair as it’s a far cry from the average €40k per customer as previous posts and plus the fact that it’s our money that the bank owe us so we should be able to get this redress and compensation in cash.. the tracker rate should have also been appliedWhy is it unfair?
It's standard in all the tracker redress cases.
Say that you were charged 5% instead of 2%.
Today, you would have paid €20k too much cash and your balance would be €30k higher than it would otherwise have been.
The redress programme would write down your balance and give you the money you have overapaid, so you would be in the same position as you would have been had they charged you the same rate from the start.
The Ombudsman probably tried to replicate that.
Brendan
Previous redress has tended to give the customer a cash payment through.
Unfair as it’s a far cry from the average €40k per customer as previous posts and plus the fact that it’s our money that the bank owe us so we should be able to get this redress and compensation in cash.. the tracker rate should have also been applied
Unfortunately I understand mortgages all too well having dealt with this for so long. I'm pretty sure AIB previous redress has been cash payment but can't find the link now. Certainly empirically that has been my experience.That is not correct. But most people probably thought that as they do not understand how mortgages work.
I have explained it in a long post some years ago, but can't find it now.
Brendan
Certainly empirically that has been my experience.
It has not been your experience in a redress issue on mortgages.
I think we are taking at cross purposes here. Obviously they didn't get the reduction in capital balance in the cheque but they did get the full amount of interest overcharge. That does not seem to be the case for Karen.I think that is very unlikely.
They got a cheque ok, but not for the full amount.
They got a cheque and the balance on their mortgage was also written down.
Read the example I linked to.
Brendan
I think we are taking at cross purposes here.
They were actually with PTSB not AIB, my bad. But they very much did get the full amount of interest overcharge put into their current account. Not privy to the details except basic outline: bought 2006 borrowing €350K on a tracker. Switched to fixed in 2008. Got redress of 32K back in 2016 or so.No, we are not at cross purposes.
You just don't understand mortgage calculations.
Brendan
I just asked again and my mistake they were with PTSB not AIB but they very much did get the full amount of interest overcharge back as a cheque.
Can you clear up if the same criteria for calculation was applied in Karen's case. Or is the ombudsman using a different method to calculate redress for this cohort.
Thanks. That's the point I was making. That we are NOT being treated the same as previous tracker redress cases. This 16% figure is very similar to what we would have overpaid compared to being on ECB + 1.5% for the past 10 years. So obviously the ombudsman isn't pulling it out of the air. He's basing the compensation on the fact that we should have been on a competitive tracker but has stopped short of putting us on that same tracker going forward. As you say a compromise.My understanding with this ruling is the solution is not the same as the previous issue.
There will not be a cheque for overcharged interest because the ombudsman has been unable to decide what a correct interest rate should have been in the first instance.
Instead, a compromise solution has been to write down 12% of the value of the mortgage when the customer exited their fixed rate mortgage. (Along with any interest they would have received on that amount since).
If I was AIB I'd give people cash as AIB would be profiting again giving you cash.
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