AIB Success! Ombudsman orders AIB to restore tracker after fixed period

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HarvestMoon

Guest
Hi, I know this seems to have been covered fairly extensively on other threads and the sticky is very informative but I would like some opinions on our case.

We took out mortgage in 2007 which was tracker, we subsequently fixed for 3 years and at end of 3 years fixed again. Upon recent review of our contract it states that at the end of any fixed period we should be offered the option of fixed, variable or tracker. We were never offered this and bank has confirmed same. (Were only offered option of fixed or variable)

They are now arguing that as trackers were taken off market in 2008 the prevailing rate is no longer applicable. I disagree with this as our mortgage contract was signed in 2007 and they should honour the contract in place. Also the wording is pretty explicit in what they should offer and there is no wording in there that gives them a get out should they subsequently change products. I think it is a pretty open and shut case and they should pony up so to speak, agree?

We have exchanged correspondence, they are refusing to budge, and am now faced with going to the ombudsman, is this other's experience that they will argue black is white even though they have been told to treat their customers favourably?!!
 

Brendan Burgess

Founder
Messages
37,832
Hi Harvest Moon

Which lender was it?

You should have been offered a tracker in 2010 when the first fixed rate matured.

Was the tracker margin guaranteed? Maybe type out what your contract actually says. I think that they will have to give you a tracker, but it will not have to be a cheap tracker.

I think that there was another question on this. You might have to search a bit for it.

Brendan
 
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HarvestMoon

Guest
Hi Brendan,

The tracker rate was outlined in the Particulars of the Loan letter and in Offer letter, it stated year 1 would be tracker with margin at 0.6% and thereafter ECB plus 1.1% for the term of the mortgage.

The clause relating to what should be offered reads as follows:

3.2 Further Fixed rate options/choice

At the end of any fixed interest period, the Customer may chosse between:
(a) a further fixed interest period, or
(b) conversion to a variable interest rate Mortgage Loan
(c) conversion to a tracker interest rate Mortgage Loan

at the bank's then prevailing rates approriate to the Mortgage Loan. If the customer does not excercise this choice, then the Mortgage Loan will automatically convert to the variable interest rate Mortgage Loan. End

The above 3.2 is in the general terms and conditions section. Bank is AIB.

Thanks
 
H

HarvestMoon

Guest
Hi, just to update on this thread we recently had a ruling from the Ombudsman in our favour on the tracker issue and our mortgage has been changed to a tracker. Advice for anyone in similar situation is do not believe a word your bank tells you and see it all the way through. It seems the banks are stonewalling people in the hope they will go away and to drag any issue out as long as possible. Go through all the required written steps and let the ombudsman rule, do not seek or accept mediation as it will only waste more time.
 

Brendan Burgess

Founder
Messages
37,832
HarvestMoon

That is great news and I have updated the thread title accordingly.

Did the Ombudsman specify what the tracker rate was to be?

Could you tell us in detail what remedy the Ombudsman ordered?

Although each case is assessed separately by the Ombudsman, it's very interesting that the Ombudsman in this case at least, does not accept the argument that they could not give you a tracker as they no longer do trackers.

There must be many others affected by this.

Brendan
 
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HarvestMoon

Guest
Hi Brendan,

Yes it was specified that it should be per the original quoted rate, ECB plus margin per original contracted rate. The remedy was to put mortgage on tracker from end of last fixed period when it should have been offered as option of fixed/variable/tracker.

I argued that it was not relevant that they no longer offer tracker product as 1) our contract pre dated any withdrawal of the tracker from the market and as it is a signed contract they are legally obliged to honour it regardless 2) Every man and his dog knows that mutiple customers are on trackers, so their argument that the tracker "product" is no longer on the market was baseless.
 

Brendan Burgess

Founder
Messages
37,832
That is even better than I expected.

From your earlier post

The tracker rate was outlined in the Particulars of the Loan letter and in Offer letter, it stated year 1 would be tracker with margin at 0.6% and thereafter ECB plus 1.1% for the term of the mortgage.

The clause relating to what should be offered reads as follows:

3.2 Further Fixed rate options/choice

At the end of any fixed interest period, the Customer may choose between:
(a) a further fixed interest period, or
(b) conversion to a variable interest rate Mortgage Loan
(c) conversion to a tracker interest rate Mortgage Loan at the bank's then prevailing rates approriate to the Mortgage Loan. If the customer does not excercise this choice, then the Mortgage Loan will automatically convert to the variable interest rate Mortgage Loan. End

"The tracker rate was outlined in the Particulars of the Loan letter and in Offer letter, it stated year 1 would be tracker with margin at 0.6% and thereafter ECB plus 1.1% for the term of the mortgage."

The Particulars letter said 1.1% for the term of the mortgage. But you took a fixed rate so you did not have a tracker to start?

Or did the offer letter give you a choice of tracker or fixed?
 
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HarvestMoon

Guest
The offer letter had us on a tracker at those quoted rates. We fixed shortly after as the feeling at the time was rates were heading up.

Assume a lot of people have the same clause in their agreement but different terms on their offer letter. The clause is the one to be relying on as it is black and white, and in legal/contract terms loosely/poorly worded (from the bank's viewpoint) as it does not give them enough wriggle room imo.
 

Table1

Registered User
Messages
2
Hi,

I am wondering if the original poster or anyone else can help me with my query. I am
In the exact same situation and my mortgage terms are exactly the same as above. I initially fixed for 3 years and at te end of that period I received a letter stating my options which detailed various fixed and variable rate options. It mentioned that the rates detailed in the letter were a sample of the rates i could opt for and to contqct the bank for further options. I vaguely recalled something about a tracker on my mortgage terms but could not find my mortgage contract. I rang the bank and I was told I was not entitled to a tracker mortgage. I requested a copy of my mortgage documentation but did not receive it. I naively assumed I must not be able to get a tracker and as I didn't want to go on a variable mortgage I opted to fix for another 3 years.

I also reduced my mortgage term two months later at the fixed rate. This fixed rate will be up in January 2013 and I assume I will receive a similar letter detailing my options next month. I have since found my original mortgage offer and the terms are identical to the orinigal poster.

Could someone advise me where to go from here? Have I got grounds to contact the bank and request a refund of overpayments for the last three years? Should I contact the bank now in relation to going onto a tracker after this fixed rate is up or wait to hear from the bank next month? Will reducing my mortgage term affect anything?

Any advice would be appreciated.
 
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HarvestMoon

Guest
Guys, I think it best to outline the steps you need to take as per previously outlined it is a long process, should not be, but until the Ombudsman or someone of that ilk takes a stand the banks will continue to stonewall. As follows this is pretty much what I had to do and would advise anyone in similar position to follow same:

-Get a copy of your mortgage contract and original offer letter.
-Contact bank, e.g. AIB, via their mortatge center, don't go via branch. By phone intially and make your initial complaint. They will most likely refuse, ask for this confirmation in writing.Make a note of the name of the person you are speaking to, the date and the exact time.
-Write to bank requesting correct mortgage rates to be offered per your contract terms, from date when you last came of fixed if apllicable. Advise them you will take neceesary steps via legal or ombudsman if they refuse.
Ask for confirmation in writing. Assuming they refuse you should write again and ask for a Final response letter confirming same position still applies.
-File a complaint with Ombudsman and it will run with them from there. It will take some time for a case officer to be appointed who will then request all relevant documents from you and bank. At this stage the Ombudsman may offer mediation, I would advise refusing as it will only take more time. Seek Ombudsman ruling as early as possible.
-In unlikely event that Ombudsman did rule agaist you then you should seek legal advice.
-It is a long winded process, around 9-10 months in our case. Assumes it suits the banks just fine to push it this way in the hope you either go away or it is long fingered.
-In hindsight a relatively straightforward process, you need to kick it off with your bank, keep and request everything in writing and let the process take its course.

Hoepfully with a positive outcome.
 

Anneprook

Registered User
Messages
3
Guys, I think it best to outline the steps you need to take as per previously outlined it is a long process, should not be, but until the Ombudsman or someone of that ilk takes a stand the banks will continue to stonewall. As follows this is pretty much what I had to do and would advise anyone in similar position to follow same:

-Get a copy of your mortgage contract and original offer letter.
-Contact bank, e.g. AIB, via their mortatge center, don't go via branch. By phone intially and make your initial complaint. They will most likely refuse, ask for this confirmation in writing.Make a note of the name of the person you are speaking to, the date and the exact time.
-Write to bank requesting correct mortgage rates to be offered per your contract terms, from date when you last came of fixed if apllicable. Advise them you will take neceesary steps via legal or ombudsman if they refuse.
Ask for confirmation in writing. Assuming they refuse you should write again and ask for a Final response letter confirming same position still applies.
-File a complaint with Ombudsman and it will run with them from there. It will take some time for a case officer to be appointed who will then request all relevant documents from you and bank. At this stage the Ombudsman may offer mediation, I would advise refusing as it will only take more time. Seek Ombudsman ruling as early as possible.
-In unlikely event that Ombudsman did rule agaist you then you should seek legal advice.
-It is a long winded process, around 9-10 months in our case. Assumes it suits the banks just fine to push it this way in the hope you either go away or it is long fingered.
-In hindsight a relatively straightforward process, you need to kick it off with your bank, keep and request everything in writing and let the process take its course.

Hoepfully with a positive outcome.
Harvest Moon,

Thanks for the above. I have followed the steps and I am now at the file a complaint stage with FSO.

Background
2006 Discount Tracker mortgage year 1 ECB +0.6%, Tracker Home Mortgage ECB +1.1% 29 Years. I drew down mortgage in July 2006 with Dicsount Tracker Rate. I fixed for three years in October 2006. Letter three years later did not give option of tracker. It is this letter of October 2009 that I have made my complaint. I fixed for a further 3 yearss. I wrote to AIB in 2015 pointing out their mistake at not giving me tracker rate as option in October 2009. They have given final response letter. I registered a complaint with FSO in September to protect my statue of limitations. I now want to submit the final response letter from AIB and make my argument to FSO.

My argument is based on clause 3.2 and that there was a prevailing tracker rate as my contract states ECB+1.1% and that there were existing customers on this tracker rate. The withdrawal of the tracker rate was for new customers. I consider myself to have a tracker mortgage which I had fixed the rate for a period. I believe the contract, which predates the withdrawal of the tracker mortgage allows me to fix and return to a tracker rate of ECB +1.1%.

It would be helpful if a successful argument that was presented to the FSO could be shared. One of the reasons it seems for the low success rate with FSO is a poorly presented case.

All advice appreciated. Thanks in advance.
 

twofor1

Frequent Poster
Messages
1,265
I drew down mortgage in July 2006 with Dicsount Tracker Rate. I fixed for three years in October 2006. Letter three years later did not give option of tracker. It is this letter of October 2009 that I have made my complaint.

All advice appreciated. Thanks in advance.
Seems that your documentation from when you fixed in Oct. 2006 and / or what you were told in Oct. 2006 will happen in three years’ time will be crucial.

What does the Oct. 2006 documentation say will happen after three years ?

What were you told in Oct. 2006 would happen after three years ?

Have a look at complaint 19, which was not substantiated, and complaint 23, which was substantiated.

Case 18 is also interesting.

Brendan: Cold Case Review attached
 

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Anneprook

Registered User
Messages
3
Thanks Twofor1.

I am not complaint 18. 19 and 23 is more similar to my case except my correspondence was written. Only one phone conversation to discuss fixing in 2006.

My argument is that Part 1 of the contract states the for 1 year my mortgage will be at the discount tracker rate of ECB + 0.6%. For 29 years it will be at tracker home mortgage with ECB +1.1% being the interest rate applied. In clause 3.2 my offer letter states that we are entitled to the option of a tracker mortgage at the end of any fixed period

3.2 FURTHER FIXED INTEREST RATE OPTIONS/CHOICE
At the end of any fixed interest rate period, the Customer may chose between:
(a) a further rate of interest paid, or
(b) conversion to a variable rate interest rate Mortgage Loan, or
(c) conversion to a tracker interest rate Mortgage Loan,
at the Bank's then prevailing rate appropriate to the Mortgage Loan.

I was not offered a tracker rate after fixing in 2006 on expiry in 2009. It is this letter where I think the mistake has been made. The 2009 letter should have include a tracker rate option. The bank has said in their Final Letter that this option was not included because the tracker product had been withdrawn. This is not relevant to me since this was an existing contract and the withdrawal applied only to new customers. Also, the prevailing rate is what ever is the current ECB rate + 1.1 margin.

In 2006 I called the bank to discuss my tracker mortgage. I then faxed a request to fix the rate for three years and asked for confirmation that they would be no cost for making this change. The 2006 letter confirming the fixed rate for three years states "With reference to your recent request, I confirm that a fixed interest rate of XX (including the existing adjustment of 0.00%) will apply to you mortgage loan from XXX for a period of 3 years. The Monthly repayments for the period of the fixed interest rate will be €xxx and will be revised on its expiry in accordance with the rate then applicable."

It is how to present this to FSO clearly and concisely that I would like an opinion.
 

twofor1

Frequent Poster
Messages
1,265
Your argument looks clear and precise to me.

Some thoughts though,

When you fixed, did you not forego your ECB + 1.1% Tracker in favour of ‘’ (c) conversion to a tracker interest rate Mortgage Loan, at the Bank's then prevailing rate appropriate to the Mortgage Loan’’

My understanding of the prevailing rate is it refers to ECB + whatever the banks margin is at that time, not ECB at that time + 1.1%.

It seems you should have been offered a tracker, but with what margin is unclear, you would be doing incredibly well if you got your 1.1% margin back, but no harm in trying.

Good luck.
 

Anneprook

Registered User
Messages
3
We have our tracker rate back end of August. We have been included in the Tracker Mortgages that AIB is reviewing
 

KarenB

Registered User
Messages
20
Thanks Brendan.

I'm one of the cohort who took out a fixed rate mortgage (in 2007) and was never offered a tracker on expiry of the fixed rate period despite having the same clause 3.2 outlined above i.e.

3.2 FURTHER FIXED INTEREST RATE OPTIONS/CHOICE
At the end of any fixed interest rate period, the Customer may chose between:
(a) a further rate of interest paid, or
(b) conversion to a variable rate interest rate Mortgage Loan, or
(c) conversion to a tracker interest rate Mortgage Loan,
at the Bank's then prevailing rate appropriate to the Mortgage Loan.

There was no margin (actually 0%) in my loan docs. The bank said there was no tracker available when my fixed rate period expired but are now offering me the prevailing tracker interest rate currently ECB+3.32%.

I note that Harvestmoon and Anneprook are a cohort who were on a tracker mortgage initially who then subsequently fixed and were never offered a tracker on expiry of their fixed rate period. They have the same clause 3.2 but the difference is they had a tracker margin in their documents. The FSO directed that they were returned to the tracker rate based on the margin in their loan docs.

Does anyone know what has happened this cohort under the AIB tracker examination?

Have AIB restored this cohort to trackers based on the margin in their original loan docs and was this due to a contractual obligation under clause 3.2?

If it is due to clause 3.2, then why are AIB not interpreting the "then prevailing rate" for that cohort just as they are for us (i.e. ECB+3.32%) rather than based on the margin in their loan docs?

If we all have the same clause 3.2 and this is the basis for restoring us all to trackers then how can AIB interpret the "then prevailing rate" differently for the two cohorts?
 

Brendan Burgess

Founder
Messages
37,832
Hi Karen

There are two broad cohorts
Those who had a price promise in their letter of offer
and those who had not.

AIB's initial stance was very clear. The "then prevailing rate" clause meant that there was no difference between these cohorts. They flatly refused to even consider these groups as impacted.

Due to pressure and lobbying from the Central Bank, Padraic Kissane, myself and politicians, they changed their stance.

The cohort with the price promise were getting their trackers at the price promised.
The cohort without it would be offered the tracker at the rate prevailing today.

If I understand the Ombudsman's decision correctly, he rejected AIB's argument that they were not obliged to offer either cohort trackers as they no longer offered them and so they no longer had a prevailing rate.

I would like to see the FSO's decision in these cases as I would like to see their reasoning on the meaning of "then prevailing".

Other than showing that AIB can be wrong and can be persuaded to change their mind, I don't see how the price promise cohort helps the second cohort.

Someone should argue that they had a price promise - the 0% margin in their contract. If anyone in the group who has received the €1,650 wants to make an appeal based on that point, I would be delighted to help them do so.

Brendan
 
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