Finance Minister should make the AIB Board accountable for the Prevailing Tracker scandal at the forthcoming AIB AGM

Brendan Burgess

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Text of a press release I am circulating today.

Consumer advocate, Brendan Burgess, today called on the Minister for Finance, Paschal Donohoe, to vote against the reappointment of some of AIB’s directors at the forthcoming AGM. The Minister owns 75% of the shares in AIB so his vote would result in these directors being ejected from the board.

Burgess, who led the AIB Prevailing Tracker Rate campaign which resulted in 6,000 people getting compensated for AIB’s failure to offer them a tracker in accordance with their contract, said that the Minister has repeatedly expressed his disapproval of the manner in which the banks have handled the tracker issue and has called for individual accountability. In fact, he has said that he is working on legislation to bring in a Senior Accountability Regime (SEAR) for bankers.

But these are empty words, if he does not back them up by making the directors of AIB accountable for the way they treated the Prevailing Rate customers who had to go to the Ombudsman to get AIB to recognise their breach of contract.

This was the single largest tracker redress issue involving payments of €300m to 6,000 borrowers who had been denied trackers.

AIB’s defence was baseless, contradictory, and confused.

“We should have offered you a tracker, but it was not a breach of contract, it was a service failure.”

“Even if we had offered you a tracker, it would have been at a rate of 12% so you did not lose out”

“The method we used in 2017 to determine what the rate would have been in 2010 is commercially sensitive.”

“But we got a top international firm of banking consultants to verify that the rate would indeed have been 12%.”

“The report is confidential so you can’t see it and we can’t tell you who the consultants who wrote it were.”

This defence would have been comical, if it had not caused such hardship to their customers. The board of AIB was chancing their arm in an effort to save the bank €300m at the expense of their customers.

The board should have admitted early on that they had breached the contract by not offering these customers tracker mortgages and should have engaged with them to resolve the problem instead of forcing their customers to endure a further 5 years of financial hardship.

Three of the candidates standing for re-election have been directors since then – Helen Normoyle was appointed in 2015 with Brendan McDonagh and Carolan Lennon appointed in 2016. These directors should have challenged the group think which deprived 6,000 citizens of their tracker mortgages. They didn’t, so the Minister for Finance should vote against their reappointment.
 

David_Dublin

Registered User
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658
Thanks @Brendan Burgess for the effort, it such a shame that there was no take-up. The argument for holding individuals to account is incontestable, it's a pity the Minister for Finance is not willing to follow through on his nicely worded prose.
 

Brendan Burgess

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43,457
The Labour Party has just issued a statement on the matter


Minister’s commitment to accountability in banking should see heads roll at AIB AGM​

5 May 2021​

Statement by Ged Nash TD
Spokesperson on Finance, Public Expenditure and Reform
  • Minister Donohoe must veto reappointment of AIB non-executive directors over bank’s handling of tracker scandal
  • Majority State-owned bank must show lessons have been learned over trackers
  • AIB had single biggest tracker redress issues involving payments of €300m to 6,000 borrowers who were wrongly denied trackers.
 

Brendan Burgess

Founder
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43,457
I called on the Chairman of AIB to resign at today's AGM.

RTE has covered it here


AIB defends handling of tracker mortgage customers but admits mistakes were made

Separately, the bank's deputy chairman has defended the firm's handling of its tracker mortgage customers.

However, addressing the bank’s virtual AGM, Brendan McDonagh reiterated the board’s view that mistakes had been made on the issue.

"As was stated previously, that the board does deeply regret the tracker mortgage issue ever occurred," he said.

"The company made mistakes. They are staying on the bank’s record. However, this board on behalf of all its stakeholders and its customers, has worked to remedy as quick as possible all of the mortgages identified through the overall tracker examination process," he stated.

"And that exercise is largely now complete, with over 99.9% of all customers having received the appropriate compensation," he added.

His response followed a call from shareholder and consumer advocate Brendan Burgess for Mr McDonagh to consider his position, as a result of the bank’s handling of the situation.

Mr Burgess said Mr McDonagh has been on the board of AIB since 2016.

During that period it approved the argument that those customers who were not offered a tracker at the prevailing rate when they should have been, did not suffer a breach of contract and were not disadvantaged.

Last year the Financial Services and Pensions Ombudsman (FSPO) found in favour of an AIB customer who had been on a fixed rate and on expiry of that, should have been offered the option of another fixed rate, a standard variable rate or a tracker at the prevailing rate.

However, they were not offered the tracker option.

The ruling had implications for nearly 6,000 other AIB customers and the company subsequently decided to offer them compensation, at a total cost of €300m.

"Why did you not point out that these arguments made no sense to any reasonable person?" Mr Burgess asked.

"Why did you have to wait for the Financial Services Ombudsman to point out that it made no sense?".

Mr Burgess said AIB’s slogan is "Backing Brave", but it takes bravery to admit you were wrong and fix the wrong done to customers.

Brendan McDonagh said the board has discharged its duties in the best interests of the company and all its stakeholders, including its customers.

He said the bank’s view was always that this customer group had not been disadvantaged by not being offered a tracker mortgage, as they would have been more expensive at the time than other rates on offer.

But he said on foot of the FSPO's final decision in March last year regarding a complaint made by one of the customers, the bank had decided to apply the same level of compensation to all of the customers and acted as quickly as possible.
 

October2019

Registered User
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119
Well done today Brendan, pity they wouldn’t let you ask a follow up question, when he said that they had resolved the problem as quick as possible I nearly fell off my chair
 

October2019

Registered User
Messages
119
:) I was actually sitting here thinking Brendan is screaming down the phone for a follow up question and there is no way they were going to let him ask it, had a little chuckle to myself as I could see your face getting redder and redder with rage :D:D:D. Anyway well done again!
 
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