Confirmed: Banks to repay TRS To Revenue

Sarenco

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You have already received an excessive amount of TRS as a result of the over-charged interest.

BOI will now settle your liability to repay this excess of relief directly with Revenue - you don't have to do anything else in this regard.

You could hardly expect to receive twice that TRS amount.
 

Mackem

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This smacks of typical sleight of hand by the banks and only adds insult to injury IMO. Did Minister Donohoe not confirm in responding to a question from Solidarity TD Paul Murphy that “banks which overcharged customers would bear the costs of the additional interest relief those customers received from Revenue” ?. Did we really believe that the banks were going to roll over that easily ?.
 

Sophrosyne

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According to the article referenced in #1:

“However, Minister for Finance Paschal Donohoe confirmed this week that banks which overcharged customers would bear the costs of the additional interest relief those customers received from Revenue.

With an estimated 20,000 customers affected, the monies owed to Revenue will run into millions of euro, given that the interest relief was paid out over a number of years in many cases.

The Minister was responding to a question from the Solidarity TD Paul Murphy, during a finance committee hearing on the Finance Bill.”

Perhaps people should email Paschal Donohoe and/or Paul Murphy for clarification.
 

Sarenco

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Did Minister Donohoe not confirm in responding to a question from Solidarity TD Paul Murphy that “banks which overcharged customers would bear the costs of the additional interest relief those customers received from Revenue” ?. Did we really believe that the banks were going to roll over that easily ?.
But the banks are bearing the cost of refunding the additional interest relief impacted customers have already received!

Did you really think you would receive double the amount of that excess relief, plus interest on the overcharged amount, plus compensation on top of that again?

Are you sure you are being realistic?
 

Emma3003

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There seems to be a lot of confusion around the interpretation of what it means by ‘the banks are responsible for paying the TRS back to Revenue’.

In the literal sense, some banks are paying the TRS overpayments - by deducting them from the customer’s redress amount and settling the bill with Revenue on their behalf.

Other banks have left customers to deal directly with Revenue, to settle the TRS overpayment themselves.

Some people assert that the bank should repay Revenue out of their own pocket for any money owed back as a result of their mistakes, which effectively would mean that the customer would get to keep the overpayment.

I’m yet to hear of anyone that has had their TRS overpayment repaid by the bank, and been allowed to keep the overpayment themselves.
 

Sarenco

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I’m yet to hear of anyone that has had their TRS overpayment repaid by the bank, and been allowed to keep the overpayment themselves.
Is that not what Roc and Mackem are suggesting should be the case?

Perhaps I misinterpreted their posts.
 

Emma3003

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But the banks are bearing the cost of refunding the additional interest relief impacted customers have already received!

Did you really think you would receive double the amount of that excess relief, plus interest on the overcharged amount, plus compensation on top of that again?

Are you sure you are being realistic?
Sarenco, forgive me for my ignorance here, but I’m not sure I understand how the banks are bearing the costs.

Are they not deducting the TRS from the amount they overcharged the customer? So in effect, isn’t it the customer’s money that they are using to settle the bill?
 

Sarenco

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Are they not deducting the TRS from the amount they overcharged the customer?
Yes but the repayment is still being funded by the bank.

The alternative would be pay to the customer the gross amount and leave it up to the customer to settle the position with Revenue.

If it was otherwise a customer that already benefitted from TRS would receive a disproportionately greater level of compensation than a customer that never benefitted from TRS.

How could that possibly be fair?
 

Emma3003

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Is that not what Roc and Mackem are suggesting should be the case?

Perhaps I misinterpreted their posts.
I don’t think you misinterpreted.

I am very interested to see how this plays out. I haven’t read the transcripts from the finance committee hearing myself, but the consensus seems to be that Pascal Donohoe stated that any TRS overpayment would be settled at a cost to the bank. That is clearly not happening, so who knows what’s going to happen next. If enough customers complain to the relevant people, the issue may be revisited and a decision made one way or another.
 

Emma3003

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Yes but the repayment is still being funded by the bank.

The alternative would be pay to the customer the gross amount and leave it up to the customer to settle the position with Revenue.

If it was otherwise a customer that already benefitted from TRS would receive a disproportionately greater level of compensation than a customer that never benefitted from TRS.

How could that possibly be fair?
Ah ok, that is where we disagree... In my eyes, it’s being funded by the customer’s money which the bank has in its possession.

Everything else you say, I agree with. I personally have no problem repaying any TRS I shouldn’t have received. And it wouldn’t be fair for some customers to benefit, and not others.
And now we go full circle and back to my issue, which we have already discussed... I’d be quite happy to settle the overpayment directly with Revenue, as then at least I’d know the banks weren’t using the TRS to their own benefit. If Revenue were to impose penalties/interest, I would of course pursue the banks to cover that element, so that I wasn’t out of pocket as a result of their mistake.
 

Sarenco

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If Revenue were to impose penalties/interest, I would of course pursue the banks to cover that element, so that I wasn’t out of pocket as a result of their mistake.
And you would, of course, be absolutely right to do so.

Perhaps it would have been more accurate for the Minister to have said that it had been agreed that the banks would bear the direct cost of refunding the TRS overpayments so that customers would have no further liability in this regard.

I disagree with you regarding the correct methodology for making the interest calculation but I do take the point that the banks would be indirectly benefitting from the (assumed) fact that Revenue are not imposing any interest/penalties on overpaid TRS.

I assume the Central Bank signed off on whatever methodology was employed so perhaps you could raise a query with them if you get nowhere with BOI.
 

Sophrosyne

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But the banks are bearing the cost of refunding the additional interest relief impacted customers have already received!
No they are not.

They are deducting the overpayment of TRS from the borrower refund and remitting that amount to Revenue on the customer's behalf.
 

Sarenco

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No they are not.
Yes, they are remitting the payment to Revenue out of a sum that would otherwise be paid to the customer. That sum comes from their own funds.

To my mind, discharging a liability and bearing the cost of that liability are one and the same thing.

I've really no interest in disappearing down a semantic rabbit hole on this point but perhaps you could ask our Minister for Finance what he intended to convey with his choice of words.
 

Sophrosyne

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Yes, they are remitting the payment to Revenue out of a sum that would otherwise be paid to the customer. That sum comes from their own funds.
How do you reckon that it is coming from their own funds in say, Emma3003's case?
 

Sarenco

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In England in similiar cases how is compensation worked out?
Mortgage interest relief was abolished years ago in the UK so the issue wouldn't arise.

I do know that compensation paid in the context of the PPI scandal was taxable in the hands of the policyholders.
 

Emma3003

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It’s not the compensation that is taxable for the PPI refund, but the compensation interest, as that is classed as income.

The resulting amount would be minimal, compared to taxing the actual compensation.
 

Sarenco

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It’s not the compensation that is taxable for the PPI refund, but the compensation interest, as that is classed as income.
The (time value of money) interest payment on the redress amount just put the policyholder back into the same position that they would have been in if the overcharging had not taken place.

The compensation amount over and above that was taxable.
 
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