I eventually got around to reading the Ombudsman's decision on this. I attach the three pages with the Ombudsman's reasoning.
It seems to me that The Ombudsman asked AIB
1) What interest was charged?
2) What interest would have been charged if there had been a 12% write down.
AIB gave him the figures and he accepted them.
But I am guessing that AIB calculated what the interest would have been as follows
1) They took the balance after the 12% reduction.
2) They worked out what the revised repayments would be
3)They worked out what interest would have been charged.
This is clearly wrong. They should have used the actual repayments, not the notional repayments.
If anyone else who has a complaint with the Ombudsman on this issue gets a letter from AIB with the answers to these questions, please send me a copy of it before replying. And if you get a Preliminary Decision from the Ombudsman, let me know.
I am guessing that AIB has misled the Ombudsman here and it's important that the Ombudsman knows this.
Brendan