permanent tsb FAQ on the redress scheme

Brendan Burgess

What redress is permanent tsb offering impacted customers?

Redress is intended to put the customer back in the position they would be
in had the failure not occurred. In this programme, Redress means putting the customer on to the tracker rate mortgage that they may now be on had the failure not occurred. Secondly, Redress seeks to return the relevant customer and the relevant account to the position it would be in had the failure not occurred and the customer moved to the relevant tracker rate mortgage.

Redress involves two elements

(1) Offer to move to a tracker interest rate:
• The tracker interest rate that is being offered to impacted customers is the rate they had a contractual right to be offered at the maturity date of their fixed rate period, had the failure not occurred. By maturity date we mean the date that the relevant fixed rate/discounted tracker rate period was scheduled to end.
• The precise rate will vary from customer to customer.
• In some cases, the customer’s conditions entitled them to a specific margin over the ECB rate.
• In other cases, the customer’s conditions provided that they are entitled to the appropriate margin over the ECB rate which was applicable on the maturity of the fixed rate (or discounted tracker) period. For these customers, the key factor is the date their fixed rate term or discounted tracker rate term would have matured, and the appropriate tracker rate which was applicable at that date.

(2) Balance adjustment/refund of overpayments:
• The customer’s account will be recalculated on the basis that they chose the tracker interest rate at the relevant maturity date.
• Their balance will be adjusted to the amount that it would have been, had they chosen the tracker rate.
• Following this adjustment, any overpayments will be refunded to them.

Note: In the case of customers in arrears, any overpayments will first be applied against the customers’ arrears balance, before any refund is made. Where the overpayments made are not sufficient to clear the arrears balance, there will be no net refund due.

What compensation is permanent tsb offering to impacted customers?
Compensation is a separate payment proposed for each impacted customer and paid directly to a bank account of his or her choice to recognise the seriousness of the failure. The amount offered to each customer reflects his or her individual circumstances.

permanent tsb is paying customers additional compensation. How did it work out what this amount should be? The amount of the compensation payment being offered to impacted customers is intended to reflect their particular circumstances.
The letter states that permanent tsb will reduce the customer’s loan balance with the proceeds of any “overpayment”.
Why doesn’t permanent tsb pay the money to the customer?

The objective of the redress programme is to put the customer’s mortgage account into the position it would have been in, had this failure not occurred and, separately, to pay the customer compensation for the failure. Putting the mortgage account into the position it would have been involves adjusting the loan balance, and depending on the extent of the overpayments, the customer may receive a net refund payment following this balance adjustment.

When will the customer receive their net refund/compensation?
The customer will receive their net refund (if any) and the compensation amount after they complete, sign and return the instruction forms enclosed with the letter.

Following receipt of these forms, the net refund (if any) and compensation payments will be paid by permanent tsb to the customer’s nominated bank account within approximately seven working days. The customer will receive a confirmation letter when the payment has been made.

Is permanent tsb refunding an impacted customer unpaid direct debit fees that it applied to the impacted account when it was in arrears?
Yes. We will be refunding any amounts that were charged to the customer’s account for unpaid direct debits from the date of permanent tsb’s failure relevant to the customer’s circumstances. Any interest accrued on these amounts will also be refunded.

Will permanent tsb refund legal fees charged to an impacted account? Yes. As part of the redress programme, permanent tsb will reimburse
the relevant loan account with any legal fees that have been charged to the account by permanent tsb since the failure occurred to date. If the customer has an arrears balance, the reimbursement of these fees will be applied firstly towards the arrears due on the loan account, and thereafter in reduction of the balance on the loan account.

What will permanent tsb do in the case of impacted customers who are currently involved in legal cases with permanent tsb in relation to arrears on their mortgage?
Any pending legal proceedings concerning the customer’s account will remain adjourned by permanent tsb while we progress with the redress programme and review the case. We also propose to reimburse the mortgage account
for any legal fees incurred by permanent tsb which were applied to the account since the failure occurred to date and to refund any reasonable legal fees incurred since the failure occurred to date relating to legal proceedings concerning the mortgage account with permanent tsb. The customer will be required to submit evidence of these fees, and payment of same (i.e. copies of relevant invoices and receipts).
Can a customer appeal the amounts they are being offered? Yes. permanent tsb has established two special appeals panels for impacted customers. Further details of the two appeals panels are set out within the Customer Guide enclosed with the letter.

Can a customer accept the compensation payment being offered to them and still appeal if they believe they should have been offered more?
Yes. Further details of the two appeals panels are set out within the Customer
Guide enclosed with the letter.

Customers may also choose to bring a complaint to the Financial Services
Ombudsman or to the Courts in respect of this matter.

If a customer believes they should have been offered a different tracker rate. Can they appeal the rate they have been offered?
The tracker rate which customers have been offered as part of this redress programme is the rate permanent tsb was contractually obliged to offer to that customer at the relevant date, as per their mortgage loan conditions. The customer has a right to appeal if they are not happy with this rate, but that appeal will be adjudicated based on the customer’s mortgage loan conditions.

For customers who are now on a Split Mortgage (or other long term treatment for arrears). How will this affect their restructure?
Firstly, as outlined in the letter, and if the customer instructs us to do so, we will restore the customer’s account to the position it would have been in if they had selected the tracker interest rate at the relevant maturity date. Following this account adjustment, we propose to review the situation and to contact the customer to discuss if there is a material change in their circumstances.
Should a customer seek independent advice on this matter? We recommend that the customer seeks independent advice. To that end we will make a payment of €400 (including VAT) (in addition to the payment of compensation) to each customer and they are free to use that to pay for such independent advice. The equivalent payment for customers who lost ownership of a property is €1,250.
If a customer’s loan account has arrears on it, will that impact on the amount of money they receive? Whether or not a customer has arrears on their mortgage account will not make any difference to the compensation payment we are offering to make to them.

However in terms of the redress element of permanent tsb’s offer, the amount of any overpayments made following the adjustment of the loan balance will be used to reduce the customer’s arrears balance, before any remaining refund amount is paid to them. Whether they will receive any net refund payment will depend on the amount of the overpayments and the amount of their arrears balance.

When making calculations does permanent tsb start at the date the customer broke from their fixed interest rate period? No. The customer’s contractual entitlement to be offered the option to move to a tracker rate mortgage would only have applied from the date the fixed interest rate period would have ended. This is the start date we use for calculating the redress offered to the customer and it is by reference to their mortgage loan conditions.

If a customer’s account is a closed account/ already paid off - How was the redress rate arrived at? In the case of closed accounts, where there is a net refund due to a customer (see redress and balance adjustment earlier in this document), the customer will receive interest on net refund due from the date the account closed to
the date on which we refund the customer. We have applied a market-based rate to the overpayment amount on closed accounts to calculate an amount of additional interest due to the customer.

What is the deadline by which a customer has to decide about changing the rate applying to their mortgage (moving to the tracker)? There is no particular deadline for this decision. However customers should note that the interim rate reduction that is currently applied to their account will remain in place until 30 November 2015. After that date the customer can
still choose to change the rate applying to the mortgage by completing the relevant instruction form, however if permanent tsb does not receive such an instruction, then the interest rate arrangement that previously applied will be restored to the relevant account and the mortgage repayments may increase.

If a customer went into arrears due to the higher repayments on their loan – will permanent tsb contact the ICB to amend their record? Yes. After we have completed the balance adjustment to the customer’s account to the correct position, we will review the customer’s credit history currently held by the Irish Credit Bureau (ICB). Should the ICB history require adjustment to reflect the updated position, permanent tsb will contact the ICB to have their records amended and will provide customers with additional support or assistance, where appropriate, should further issues arise. If a customer would like a copy of their ICB record, permanent tsb will provide the customer with a copy of their ICB report, at no cost to them. Please note that this review will take place over the coming months and an amended ICB record will be available in due course.