Ombudsman increases compensation from €10k to €20k

[Brendan Burgess]

Full decision : https://www.fspo.ie/decisions/documents/2020-0102.pdf

It's a complicated case of many properties, but this is my understanding on a first reading. ( I will study it in detail again.)

July 2014 Made a lump sum payment of €52,893 from his savings

July 2016 - Sold a rental property in the UK and used the proceeds as follows:

July 2016 Made a lump sum payment of €100,000

Automatic payment made:

The figure in dispute was the amount of compensation.

The Appeals Panel awarded a further €5,000 in compensation to bring the compensation to €10,227

Ombudsman's decision:

1 should be increased from €10,227 to €22,000 in total.

This is classified as an upheld decision. I doubt that the complainant considers it upheld. It seems to be only very partially upheld.

Brendan


No basis for 2,3 or 4.

 

[Brendan Burgess]

Stress and anxiety

This guy was overcharged €45k on a buy to let.
He got it refunded. He got the time value of money on it.
At the time he had 52k in savings and a UK property worth €125k with no mortgage.

In my view, €4,577 compensation for this is huge. I would not have offered him the €5,000 which the Appeals Panel offered him, much less the additional €12,000 which the Ombudsman awarded him.

Overpayment of €52k

It's very clear that he would not have made this overpayment had he been on a cheap tracker rate.

I would have directed the lender to reverse this overpayment. In other words, give him €52k cash and add this to the mortgage balance.

Sale of UK property and overpayment of €100k

I agree with the Ombudsman that his worries about Brexit were his prime reason for selling the UK property and so I would not have compensated him for the loss of capital value.

However, I would direct the lender to offer him an additional mortgage of €100k at tracker rates today.

 

[Brendan Burgess]

This was a very complicated case but the treatment of the overpayment is the most important aspect.

While every case is different, the Ombudsman should set out a principle for how people who have made overpayments should be treated.

Most people would not have made the overpayment had they been on a tracker.

A fair solution would be to offer them back the overpayment today at the tracker rate. They would be free to pay this off their mortgage if they wanted to.

Brendan

 

[Banquo]

Detailed and interesting analysis.

I wouldn't agree with your assessment around stress and anxiety, I thought the compensation requested was justified. When significant sums are involved as they are in this case it impacts every decision you make at the time.

I think your suggested redress regarding the other points are good ideas. It seems odd there is no standard approach for overpayments.

Regarding overpayment in general do you think that the complainant should also get the TVM on the payment at the mortgage rate, for the period of time that the bank had the overpayment?
That would only seem fair.


In general it concerns me that the banks are not being suitably punished for their bad actions.

They had use of these funds with which they reinvested in the market at generous rates (our consumer rates are amongst the highest in Europe) and when they are forced to give the money back they use deposit rates to calculate the TVM. Compensation is minimal and the banks keep the net interest margin. Where is the severe penalty to make sure this never happens again???

 

[Brendan Burgess]

I wouldn't agree with your assessment around stress and anxiety, I thought the compensation requested was justified. When significant sums are involved as they are in this case it impacts every decision you make at the time.

I am studying this decision again in detail. The Ombudsman actually says this

The Complainant has indicated that during the period of overcharging that he was
under “financial pressure”. I have not been provided with any evidence to that effect. It
would appear to me that there is in fact evidence to the contrary, in that, the
Complainant had “built up” rental income from the UK investment property to the
amount of at least €62,893.08 by July 2014.

That being said, taking into consideration all of the evidence before me in terms of the
significant level of overcharging that occurred on mortgage account ending 5463, which at
its least was in the region of €200 per month in early 2009 and at its peak was over €800
per month, in early 2014 and the time period of almost nine years (2009 – 2017) over
which the overcharging occurred, I am of the view that the level of compensation offered
is not sufficient or reasonable to compensate the Complainant in the particular
circumstances of this complaint. I have also had regard to the overcharging on mortgage
account ending 7063, which was less but when taken in the round adds to the sums that
the Complainant was overpaying to the Provider on a monthly basis.

it cannot but be
the case that the unavailability of sums rising from €200 up to €800 on a monthly basis
over a near nine year period, was a source of great inconvenience to the Complainant and
his family

The Complainant has outlined that the monthly outgoings to provide for his family
included “tuition/grinds/school uniforms and fees, medical, child care and home help” and
other outgoings in the form of “school trips” and “family holidays”. I have no doubt that
the Complainant and his family suffered inconvenience as a result of the Provider’s
overcharging. In this regard, I find it extraordinary that the Provider has stated that it does
not believe that the Complainant has demonstrated any inconvenience. I am at a loss to
know how the Provider arrived at this view in the particular circumstances of this
complaint.