Complaint regarding KBC variable rate mortgages

stefg

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Anyone who is a KBC "New Business" variable rate mortgage customer should be aware of the following:
  • KBC's variable mortgage offering is far from clear
  • KBC's variable rates are not the commonly understood notion of variable rates used by other banks
  • KBC treat mortgages for "New Business" and "Existing" customer rates differently
  • KBC treat for "New Business" and "New Business" customer rates differently (2 customers on the same variable LTV mortgage pay different rates)
  • Previous KBC "New Business" rates do not benefited from any of the subsequent rate cuts.
  • "New Business" rates are effectively upward only as they reserve the right to increase them and the right not to decrease them in line with equivalent KBC rates.
  • I believe (with supporting documentation) that KBC to be in breach of the Consumer Protection Code
If you are affected by this scenario I would be interested if you could post here or PM me to let me know your thoughts:
  • Does this scenario bother you or are you satisfied with this arrangement?
  • Did you know when taking the mortgage that it would not be eligible for subsequent rate cuts announced by KBC?
    • If no, would it have affected your decision to proceed with KBC if you had known?
    • If yes, do you have any documentation explaining the situation?
  • Were you provided with any documentation that suggested the rate was an introductory / promotional rate?
  • Have you queried or complained about the issue with KBC?
I already sent a formal complaint to KBC and their response was very poor. They dismissed my complaint without any addressing the pertinent points of my letter.

As I now have a final response letter I am preparing a complaint for the FSO as I believe I have sufficient detail and information to demonstrate that KBC are operating in breach of their obligations to customers as a regulated mortgage provider.

Any further information I can gather will help me give a comprehensive and accurate complaint to the FSO.

Thanks in advance for your help
 
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Hi Stefan,

Sure. I can add my voice. I don't know how far you'll get with them though.

In answer to your questions

1: Yes this scenario bothers me. I'm in the process of switching. This process is nearly complete. It's at the solicitor stage. I can't wait to switch. It'll save me over €100 a month to move off KBC. The banks don't make this process easy though. They are extremely slow.
2: No, I assumed that the variable rate would rise / fall somewhat in line with the central bank rate.
2a: I don't know. I was more ignorant than I am now about mortgages. If I was going with KBC tomorrow this would affect my decision to go with them.
3: I have an older mortgage (8 years now) I got mine before they were segregating customers.
4: I've queried it. I was told they don't negotiate rates.

A point you haven't asked about is their other products. Last year (right before they started messing about) I opened up a current account to save the extra .2%. The plan was to move all of my banking to KBC. I was going to switch my credit card too. Just after I opened the account they started advertising cheap rates for new customers. I asked at the time about this affecting my rate. As the answer wasn't satisfactory I decided to leave my old current account alone and just keep the KBC one for the rate discount. Now, the day I switch to my new bank will be the day I close the current account with KBC.

You haven't mentioned that they don't have a LTV policy for existing customers. My LTV is 65% and I'm paying the same rate as somebody on 85%. If my LTV goes down to 55% I'd still be on the same rate.

Would I use them as a mortgage provider again?
Yes. I'd evaluate them based on the savings to me at the time. I've been very happy with the customer service with KBC and they've always been helpful, responsive and reasonably efficient. That's all excluding any time I've ever asked about a rate reduction obviously. However to get me back as a customer is going to cost them 1000s. They'd have to be .2% or more, less than my new rate for it to be worth my while to switch and it's not a process I'll do lightly and if the rate they offer at the time is an "introductory rate" then I won't consider them.

This has cost them at least two customers that I know of. I was talking about my mortgage with a customer that was in the middle of applying to KBC. When I told them about their "existing customer" policy he looked into it more and went elsewhere. My sister has been approved for a mortgage in the last couple of months. KBC weren't on her radar after talking to me. I'm not bad mouthing them, I'm just telling them my experience and telling them to educate themselves as to each banks rate. I've been a customer for 8 years and haven't missed one payment. We've paid a significant amount extra off too. Doesn't matter at all to KBC.
 
Does this scenario bother you or are you satisfied with this arrangement?
It is quite annoying, my rate is not the 4.X% that some are on, so I am not getting as shafted as others.

Did you know when taking the mortgage that it would not be eligible for subsequent rate cuts announced by KBC?
Absolutely not.
If no, would it have affected your decision to proceed with KBC if you had known?
Of course it would.​

Were you provided with any documentation that suggested the rate was an introductory / promotional rate?
No

Have you queried or complained about the issue with KBC?
Not yet, I will most likely just move to Frank Money when/if they get setup.
 
Hi Stefg,

I too am a very annoyed KBC customer.

I took out a <60% LTV mortgage with them in November 2014. The rate I got at the time was 3.65%, which included the 0.2% discount for opening a current account with them. If I was to draw down the same mortgage today, I would get a rate of 3.15% for the same <60% LTV product. This is a difference of 0.5%. I have asked them to change my rate, but they have refused. This clearly shows the disgraceful way they treat existing customers compared to new customers.

If I could leave KBC and switch to another bank I would, but both myself and my partner recently changed jobs, and we are both on probation, so no bank would entertain us as switchers at the moment.

To answer your questions:

  • Does this scenario bother you or are you satisfied with this arrangement? It absolutely does.
  • Did you know when taking the mortgage that it would not be eligible for subsequent rate cuts announced by KBC? No, this was never communicated to me.
    • If no, would it have affected your decision to proceed with KBC if you had known? Yes
    • If yes, do you have any documentation explaining the situation? No, communication was always by phone.
  • Were you provided with any documentation that suggested the rate was an introductory / promotional rate? No.
  • Have you queried or complained about the issue with KBC? Yes, it got me nowhere.
I would encourage anyone who is thinking of switching to KBC to avoid them, and instead go to AIB or Ulster Bank, both of which treat new and existing customers the same.
 
I would encourage anyone who is thinking of switching to KBC to avoid them, and instead go to AIB or Ulster Bank, both of which treat new and existing customers the same.

If you were in a position to switch to AIB today you would reduce your rate by 0.1% immediately and by 0.35% in July (assuming nothing changes between now and July) and by 0.15% if you switched to Ulster Bank.

I don't blame you for wanting to switch mortgage provider (and I would encourage you to do so when possible) but the savings would be pretty modest. The fact is that there are plenty of borrowers that would look with some envy at your current rate.
 
Oh I understand some people would be very happy with the rate I am on.

But since I drew down the mortgage, KBC have reduced their rates 4 times for their <60% LTV product (3.55%, then 3.50%, then 3.25%, and now 3.15%). Each time they cut their rates, it’s a real kick in the teeth, as they won’t put me on the new rate.
 
But since I drew down the mortgage, KBC have reduced their rates 4 times for their <60% LTV product (3.55%, then 3.50%, then 3.25%, and now 3.15%). Each time they cut their rates, it’s a real kick in the teeth, as they won’t put me on the new rate.
I am in the same boat, except its only 3 cuts for me (I signed up on the 3.55% rate). However, I would say that it is within your control to switch away from them (once your probation is up), and should enough people do this then the policy will no doubt change. There are others who are trapped, who would be very envious of the position we are in.

It will be very interesting to see if say 75% of those who switched into them on lower LTV's in the 2014-15 period switched out if Frank Money comes on board, would they change their policies ? I am guessing yes !
 
I'm curious why seeing other people get a better deal upsets you so much?

You are on a better rate than the vast, vast majority of borrowers on a (non-tracker) variable rate - does it really matter that a tiny minority of borrowers subsequently got an even better deal?

Again, I would encourage you to refinance as soon as you can and it makes sense to so - that's what will drive competition in our mortgage market.
 
I’m not upset that other people are getting a better deal than me. What’s upsets me is that KBC won’t give me the same rate as new customers!

Unfortunately we won’t be able to switch until 2017 when both out probation periods will be up. But we’ll be gone from KBC as soon as we can!
 
Question for anybody more knowledgeable than me. Would we have a case with the Financial Ombudsman ([broken link removed])
i.e. we've bought the same product at different times and are all getting charged different prices.

I accept that prices change as you buy something so if I bought something in a shop on Monday and it was cheaper on Tuesday I'd have no case.

But if 3 KBC customers on 1st June owe 250K one can be paying 4.05% (me), one can be paying 3.55% (gnfIreland above) and one can be paying 3.15% (new customer)
So 3 of us have the same product but have 3 different prices. There may be more bands, I don't know how KBC keep track of it.

There may be still no case for the ombudsman but hopefully somebody here may be in the know about this stuff. It's a clutching at straws thing. I don't have faith in the FF / FG bills and I'm switching anyway but if the ombudsman found an issue maybe there'd be a refund. I'm not holding my breath but it's worth asking.
 
But if 3 KBC customers on 1st June owe 250K one can be paying 4.05% (me), one can be paying 3.55% (gnfIreland above) and one can be paying 3.15% (new customer)
So 3 of us have the same product but have 3 different prices.

To be absolutely pedantic here, are we on the same products ?

If I look at my original BoI Mortgage Agreement, the product I have signed up to has been assigned a particular code on it. I cannot seem to find the same code on the KBC mortgage offer.

Has anyone been successful in finding it, and if so you let me know where it is. This should be 'key' to any complaint in line with the details above

BTW - I am on a LTV<60% rate
 
To be absolutely pedantic here, are we on the same products ?

If I look at my original BoI Mortgage Agreement, the product I have signed up to has been assigned a particular code on it. I cannot seem to find the same code on the KBC mortgage offer.

Has anyone been successful in finding it, and if so you let me know where it is. This should be 'key' to any complaint in line with the details above

BTW - I am on a LTV<60% rate

Depends how you define a product I suppose?
At it's basic level we both borrowed a sum of money from KBC.
You can give it a new product code but I'm not sure how different a product has to be for it to be really different i.e. as a seller I can't just pop a new sticker on something and say it's different. KBC on their site don't say they're different products. They just say new customers and existing customers. I would think that there would be some expectation that a new customer turns into an existing customer after a period of time. This doesn't seem to happen.

I'm not on an LTV rate. That's another super advantage of my rate. It has no LTV component so I'd be paying 4.05% if I was on 85%, 63% (which I'm on now) or 2%.
 
@qwerty5 If I was being honest, I would say we are on different products (I define a product as a commercial offer to customers), but utilising the same underlying service (lending of money).
The commercial offer I signed up to is a "LTV<60%" offer, as opposed to a LTV 60-80% offer.

Product/Offer differentiation is widespread in the market place - I am not sure you will convince any 3rd party that this is not a feature of business today.

Does that make sense or sound reasonable? I will add that it is my personal view on it only
 
@qwerty5 If I was being honest, I would say we are on different products (I define a product as a commercial offer to customers), but utilising the same underlying service (lending of money).
The commercial offer I signed up to is a "LTV<60%" offer, as opposed to a LTV 60-80% offer.

Product/Offer differentiation is widespread in the market place - I am not sure you will convince any 3rd party that this is not a feature of business today.

Does that make sense or sound reasonable? I will add that it is my personal view on it only

OK. So for the new "new" customers what does that mean? Are they going to remain on a rate different to you? It looks like they have exactly the same product as you.
Or do they become an old "new" customer to get your rates or become an "existing" customer to get my rates.

KBC aren't naming products they have new and old customers if you look at their site.

I'm sure they have it covered in the T&Cs and I'm not really too bothered about it. What you say sounds reasonable and it's probably the way it is. I was just throwing it out there in case anybody who's an expert might say "hang on a minute". As a customer (a slightly educated customer but no expert) I can just surmise. I don't expect KBC to be fair, their only function is to make money but they're also regulated.

Threads like this and other threads are gaining momentum, I'm seeing more mention of KBC not reducing rates on different sites so when people are researching KBC they're finding this out and hopefully looking into KBC a bit more before signing on the dotted line.
I would think this is beginning to cost them customers. Obviously some existing customers will do the maths and may switch and I know of some potential customers who went elsewhere when I pointed them to this site.
Either the number of losses is too small for KBC to care about or eventually they'll reduce rates for existing customers. It won't help me as I'll be with a different bank but it might help some customers who can't switch.
 
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So for the new "new" customers what does that mean? Are they going to remain on a rate different to you? It looks like they have exactly the same product as you.
Or do they become an old "new" customer to get your rates or become an "existing" customer to get my rates.
Yes, this is why I asked the question. Someone signing up to a LTV<60% product today, I am wondering if that is the same LTV<60% product that I signed up to? If so, how have KBC differentiated them externally, and is it a 'reasonable' differentiation.
I feel this is a different conversation to the one regarding your product.

KBC aren't naming products they have new and old customers if you look at their site.
That's fair enough on their website, but I wonder are they naming them in the mortgage home loan agreements with the customers. If they are, and they are the same product, this may be a different matter. Charging differently for different products is one thing, different for the same product is another matter, especially if the difference is not covered by an introductory promotion, that is clearly communicated to the customer


I'm sure they have it covered in the T&Cs and I'm not really too bothered about it.
Don't be so convinced on that. I imagine when the generic T&C's where written up they may not have adopted the policy they now have. Lots of companies make 'omisions' in their T&C's

I'm not really too bothered about it.
I am - and looking through all the detail I have to see what I can do about it. Ultimately I know I can switch, if I have to


I was just throwing it out there in case anybody who's an expert might say "hang on a minute". As a customer (a slightly educated customer but no expert) I can just surmise. I don't expect KBC to be fair, their only function is to make money but they're also regulated.
And I agree completely here. I was replying to you as a "slightly educated customer but no expect" as well, but drawing on logical experience in other industries around product differentiation. But I am sure there are experts out there who would question the behaviour and I imagine they are probably in a very grey area at best.

I would expect the function of any company is to make money, but I would also expect all organisations to be fair in doing so. At the end of the day, happy customers result in repeat business and repeat business means more profits to most organisations. KBC seem to want to trap customers and seem content with losing a portion of them quickly. They are probably relying on apathy on the remainder !
 
In the same boat as stephg. They're not pass on better rates and not open to negotiation based on brief telecom with three cuts service on three separate occasions.

Will switch as soon as there's confirmation re any new entrants (although won't wait around indefinitely). Will save 20k over life of mortgage based on aib rate.

Short sighted strategy by kbc by giving better rates to new customers but not passing onto existing customers. More people that post online the more people will become aware..
 
Is that not just another way of saying the same thing?

Sarenco its not the same thing. Subotai isnt annoyed with others for getting a lower rate. He is annoyed , and rightly so, with kbc for not also affording him an equally good rate as those other customers. Theres a clear difference there. subotai isnt upset at the sight of others getting a good deal! He is upset that his bank kbc wont also give him a good deal when they are giving it to others. Your post is suggesting a jealous bitterness on the part of subotain towards others "getting a better deal" which is fairly silly of ya.
 
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