Key Post Successful case - NIB investment property on home loan rate

Discussion in 'The Financial Services Ombudsman' started by twofor1, Jul 19, 2012.

  1. DingDing

    DingDing Frequent Poster

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    I think NIB were splitting up their customers into goupings and using the Current account package as the indicator, so the high earning customers with good loan to value ratios and good payment records were offered the prestige account.

    I had to undergo a financial assessment to become eligible for the package and there was no increase in the credit card limit.
     
  2. greenoverred

    greenoverred Registered User

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    Thanks for contacting me on this Brendan. Unfortunately I dont have good news on this.

    Ill try and put up a summary of the case during the week but I have to say not very impressed with the ombudsman
     
  3. Brendan Burgess

    Brendan Burgess Founder

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    Hi Green

    That is disappointing. I look forward to your summary as it will be interesting to see how it differs from the successful cases.

    Brendan
     
  4. Butter

    Butter Frequent Poster

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    Sorry to read that greenoverred. Please do post up a summary of what happened.
    I've just read back over the previous postings about your mortgage & I am surprised based on that info that you didn't win.
     
  5. greenoverred

    greenoverred Registered User

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    Ok. Here is the summary of how this case went for me. Unfortunately I did not have good news at the end of it but hopefully by sharing my experience it may be some use to others

    I took out a mortgage in August 2006. It was on a fixed term which expired in August 2009. When it expired I received a letter from NIB informing me that my rate was now 4.15%. I queried this with my local branch to no avail. At this stage I decided to change providers as I was getting a better deal elsewhere. My mortgage changed to that other provider in January 2010.

    I started the complaint procedure by writing to the bank. I kept the complaint simple basically highlighting that I felt I was overcharged from August 09 to January 2010 as my Loan agreement stated that “that unless a further fixed period is agreed at the end of the fixed period the rate of interest applicable to the loan will revert to our then applicable variable home loan rate”. The variable home loan rate in August 09 was 3.4%.
    The bank rejected this stating that they” introduced a new reference rate for home loan borrowers, i.e. those borrowing to purchase their family home, known as the ‘Home Loan Rate’ in 2009 and extended a discount to those borrowers who met the criteria. As your loan did not qualify for the discount, the rate applied to your account at the end of the fixed period was determined by clause 11.4 of your facility letter until its closure”

    So this response totally ignored the fact that my Loan agreement said I should be on the home loan rate.
    I then sent my complaint to the Ombudsman. Again I kept things simple. Also in this complaint I told the ombudsman that I was aware that he had carried out similar investigations into NIB. After I had sent in all supporting documentation I was offered the chance of mediation which I turned down.

    NIB’s response to the Ombudsman included the following
    • They say that I was eligible for a loan the interest on which would be calculated by reference to the Banks variable reference rate known as the variable annuity mortgage rate.
    • In the case of any loans with fixed rate periods the variable reference rate is relevant as it is stipulated to be the rate applicable to the loan following the end of the initial fixed rate.
    • The standard variable rate was 4.15%
    • That they gave a discount from the variable interest reference rate to PPR customers but not IHL. I.e. the same variable interest reference rate continued to apply to all customers but PPR customers got a discount.
    • They said in order to distinguish who should get what rate, to ensure that customers correctly interpreted the banks interest rate notices and for clarity as regards their reports to the Central Bank they rebranded the rates and it was this rebranding that regrettably caused confusion but notwithstanding all customers continued to have their interest calculated by reference to banks variable interest reference rate. They also stated that
    “It’s important to apply the correct meaning to clause 11.4 which governs the switch from the fixed rate period to the subsequent variable rate. The mortgage agreement clearly indicates that the rate applied will be determined at the point in time when the event occurs and does not in any way commit the bank to an explicitly named rate. The letter states the “the then applicable home loan rate”. In the event that the bank had agreed to explicity named rate this would have been specifically described using capital letters “

    I was given the opportunity to respond to this within 10 days. (The bank was given 20 days to come up with this garbage and actually took 37 to respond but this did not seem to be an issue for the ombudsman) I was told there was no point in repeating anything I had already stated earlier.
    I was very naive at this stage I should have addressed the issues in the banks letter but I presumed since the ombudsman had looked into these cases previously he would see through all the nonsense in the letter. I did not want to delay things any further.

    Anyway the ombudsman found against me. The first thing that jumped out to me from the ombudsman letter was the following. This was the first time I was told this and a lot of my case was based on this.
    “Before considering the substantive complaint I must draw the attention of the parties to this dispute to the fact that while reference has been made by the complainants to a published case study from this office, this office does not operate on the basis of precedent and therefore this particular finding will be considered in its own merits only and not by reference to any other decisions or published case studies which may have been issued by this office”

    Just as a side note if I had won my case I would have received €819.35. This was for 5 months of overcharging on a €226,000 mortgage. Some people have been overcharged thousands and to me anyone the ombudsman does not seem concerned.
     
  6. Brendan Burgess

    Brendan Burgess Founder

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    Greenoverred

    I have to say I would have adopted your approach to the claim as well, other than the bit about precedent which I was aware of.

    It seems very clear to me.

    They told you that they would put you on the home loan rate and they did not do so.

    Although the other cases have no precedent value, you could reasonably expect a similar logic to apply. I would have thought that there was no need to reply to NIB's reply which makes no sense.

    Brendan
     
  7. greenoverred

    greenoverred Registered User

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    Yes Brendan I taught this was cut and dry and was probably to confident.

    I should have addressed the Banks letter because as far as I could see a lot of the stuff in it was just made up and I should have looked for proof. I put to much faith in the ombudsman to carry out a proper investigation. He has dealt with this before so they will have known the letter contained a lot of untruths

    If the ombudsman had let me know earlier about the precedent I would have addressed this. The fact he was publishing case studies telling us all how good he was led me to think that in one way he was encouraging people to come forward. I dont like this precedent issue in the ombudsmans office as it leaves thing wide open to be abused
     
  8. DingDing

    DingDing Frequent Poster

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    The precident issue also means that they are not likely to force everyone that was disadvantaged by the bank to be reinstated to the position that they were in.

    I suppose it is hindsight now but we would have responded comphrensively at every opertunity.

    Your case seems slightly different as we got a letter recategorising the loan as an investment loan from a housing loan. Did you get this letter, it is not clear from your post above.
     
  9. Butter

    Butter Frequent Poster

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    Sorry to read all of that Greenoverred. Reading Ding Ding's comment - I suspect that as you were on a fixed loan rate in Feb 2009 you may not have received the renaming letter, but just got moved automatically to the investment loan rate at the end of the fixed rate period. I would have thought the name of the loan in your initial contract should still have applied though.

    I have just read backover my file to remind myself of the sequence of events in my case with the FO.

    When NIB responded to the FO's questions I was copied in on their response. I then wrote again to the FO in response to NIB's letter and picked apart every one of their statements over 4 A4 pages. I was not prepared to let some of their statements sit without disputing them as I felt some of them were plain wrong & misleading & actually personally insulting.

    I did mention the 2009 FO finding in relation to a previous similiar case in the second of my letters to the FO. I used the published case to refute NIB's defence to my own case which was that out of their concern for homeowners in the current economic climate they were applying a "special discount" to home loans but not investment loans. I pointed out that this defence had not previously been used but that it seemed that NIB had come up with this strategy when their previous defence failed to impress the FO. At no time had NIB advertised their goodwill to homeowners & had in fact just reduced home loan rates in line with ECB interest rate cuts - but did not apply them to the investment mortgages. NIB were very annoyed in their next letter & more or less accused me of trying to use precedent to win my case. They also stated that it was not my job to comment on the answers that they had given to the FO office, which I was most amused by.

    After NIB's second response letter to the FO, I was given a copy and asked if there was any new information I wanted to add. I had no new information at that point, as I felt I had given as much information as I could at that stage (6 A4 pages, including my first letter to the FO, plus copies of all relevant documentation). However I did email the case-officer with my final response to NIB's second letter where I again refuted their latest statements (including the fact that I was trying to use precedence).

    It may seem like I went overboard in my correspondence with the FO but I wanted to refute each and every one of NIB's disingenuous statements. I set out the story of why I chose the NIB mortgage, the timeline of events, correspondence from the bank, why I was entitled to be on the home loan rate and refuted every wrong statement & defence that NIB made.

    There is no precedent set by the FO in any case as far as I can see and each case has to be argued individually. NIB are disputing each case individually & are obviously winning some of them (a fact that they referenced in their letter to the FO in relation to precedence). Each case is assigned to an investigating officer who makes a ruling which is sent to the FO to be signed off. I was afraid that my case officer may not be aware of previous cases with NIB, which is why I gave so much information, and so I would advise anyone to reply comprehensively at every opportunity - and allow no justification of NIB's to go unrefuted.
     
  10. greenoverred

    greenoverred Registered User

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    No. I never received the rebranding letter. The letter I received was when I ended my fixed term that my rate would be 4.15% even though the advertised home loan rate at the time was 3.4%.


    Im sorry I didnt respond to NIB's letter. It was made up of lies and untruths, but I naively taught that if the ombudsman was going to conduct a fair investigation into this that he would see through these lies. He just had to look at previous answers they gave to why the rate rebranding took place. Its not basing a decision on precedent but just trying to find out if the answers they are receiving during the course of the investigation are truthful.

    I was just keeping to the facts of the case and I had no new facts to introduce at this late stage so unfortunately I didn't respond to it. It really should be up to the investigator to investigate if the information they are receiving is truthful or not.
     
  11. twofor1

    twofor1 Frequent Poster

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    Your case appears different in a number of respects;

    It started out as a Fixed Rate Mortgage, so presumably was not called a ‘’Variable Rate Home Loan’’

    You had not previously benefitted from ECB reductions.

    At the end of the fixed rate period your loan would revert to their then applicable ‘’Home Loan Rate’’ not simply their ‘’Home Loan Rate’’

    It does seem unfair that you did not win your case, I think your rate should have reverted to their ‘’Home Loan Rate’’.

    What reasons did the Ombudsman give for not upholding your complaint ?
     
  12. Brendan Burgess

    Brendan Burgess Founder

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    "NIB may have to refund hundreds of buy-to-let investors"

    Hi folks

    Well done. Great coverage of your NIB stories in today's Indo

    NIB may have to refund hundreds of buy-to-let investors

    and

    Follow Larissa's lead and phone the Ombudsman for help with banks


    ACCOUNTANT Larissa Feeney ended up with an investment property by default.


    She had moved out of her house in St Johnston, Co Donegal, in 2008 but was unable to sell it so she decided to rent.


    The property had been financed by a National Irish Bank (NIB) [COLOR=#009900 ! important]variable[/COLOR], which the [COLOR=#009900 !important]bank[/COLOR] said was a home-loan rate.


    The agreement was for her to repay the interest only for the 25-year term of the loan.


    She got suspicious when NIB wrote to her in 2008, telling her that the name of the mortgage product was being changed from variable rate home loan to an investment mortgage.


    There was no mention of any change in the interest rate. But weeks later the interest rate shot up by 0.75pc.


    She contacted the bank and she was assured that there had been no change in the terms and conditions she had originally signed up to.
    "I found the bank very difficult to deal with and they were adamant that what they were doing was right," she said.


    Ms Feeney complained to the bank about being switched to a different type of mortgage with a higher rate, but to no avail.


    So she took her case to the Financial Services Ombudsman and won.


    Refund
    She got €1,600 refunded to her to cover her for the higher interest charges imposed by the bank.


    But she had to return to the ombudsman again to get the bank to move this refund money from the mortgage account to her current account.


    She would encourage other customers in the same position to take a case to the ombudsman.


    She stressed that you do not need to be an accountant to take a case.


    There are good pointers on www.askaboutmoney.com.
    charlie weston
     
  13. 10amwalker

    10amwalker Frequent Poster

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    Fixed rate

    Incorrect twofor1 as I too started with a fixed rate mortgage for 3 years which ended in June 2009 and the documentation signed in 2006 outlined that at the end of the fixed period I would revert to the applicable variable home loan rate unless a further fixed period was agreed.

    I received a refund of €3,015 in March 2011 as the overcharge in interest from May 2009 to March 2011 as the Financial Ombudsman found in my favour.
     
  14. Butter

    Butter Frequent Poster

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    Great to see today's Indo article - I hope it encourages others to complain to NIB.

    As there are stories of both successes & failures in the FO - I think the importance of framing your complaint correctly is vital. Some arguments seem to hold more sway with the FO than others. Also make sure to refute NIB's defence and don't assume that the case officer will see through that defence - they may not be aware of previous cases.
     
  15. Butter

    Butter Frequent Poster

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    I've been trying to figure out what made greenoverred's case different.
    He stated that he kept his complaint to NIB simple, outlining that he felt he had been overcharged b/n Aug 09 and Jan 10. I haven't see that initial complaint letter so I can only go by what's written here on AAM.
    The bank's defence was their now standard response that everyone was being charged the same reference rate but that home loans were being a special discount. This statement has to be argued against because there was no "special discount" and NIB cannot show where they informed the public of this special discount. What actually happened was that they applied the ECB interest rate cuts to home loans & not to investment loans thereby treating investment loans differently.
    Perhaps in this case as greenoverred did not dispute NIB's defence the FO agreed that NIB were merely offering a discount to home-owners which in theory they could be entitled to do.

    But the renaming of the mortgages is what allowed the separation of investment & home loans to allow them to apply different rates.

    My complaint focused on the fact that NIB altered the terms & conditions of my variable rate home loan mortgage when they renamed my mortgage to an investment rate home loan and then applied different rates to both types of loans. We asked that our mortgage have the original terms applied to it with the same variable rate applied to it as to all other home loans. When I took out my mortgage I took it on the basis that NIB had only one rate applicable to home & investment mortgages & I believed this would be to my benefit over the life of the mortgage. NIB unilaterally changed that when they renamed my mortgage as they then operated different rates for the different types of loans.

    This is what I actually won my case on - that I was financially disadvantaged by the "name change" & that I had a reasonable expectation at the time of drawdown that my mortgage would be treated as a home loan but that NIB had altered my terms & conditions by the renaming it & no longer applying the same conditions as with home loans.

    I hope that all makes sense. It's why I believe that how you frame your initial complaint & argue against NIB's defence is so vital. In theory these cases are all the same but in terms of the compliant & the rationale behind it they do differ.
     
  16. greenoverred

    greenoverred Registered User

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    Hi

    "At the end of the fixed rate period your loan would revert to their then applicable ‘’Home Loan Rate’’ not simply their ‘’Home Loan Rate’’

    Yes this was the crux of my complaint.

    When I took out my mortgage I had an option of the fixed or standard variable rate. The fixed rate at the time was also a Home Loan Rate and not an investment property rate.
    Like others the reason I went with NIB was because investment property mortgages were been offered at Home Loan Rates.

    When the fixed period ended the then applicable Home Loan Rate was 3.4% not 4.15%. 4.15% was for investment properties

    The only difference between the complaints was they did not notify me what they were doing. They just decided that at the end of the Fixed term they were putting me onto a SVR which applied to investment properties and not a Home Loan Rate.


    I think the best thing would be if I put a copy of NIB's response and a copy of the FO decision on here. It will give an idea of the lies that NIB are willing to submit to defend these cases and also show that the ombudsman is just happy to accept them. This may be of use to anyone making similar complaints
    Ive already sent the FO decision onto Brendan so let me know if there are any problems putting it up here.

    One thing I will say, dont expect to much from the ombudsman on this. I foolishly taught he was investigating my complaint but it seems the complainant has to do all the investigating and the ombudsman will only decide on whats in front of him on each individual case. He was clear in his response to me that he could not look at previous cases so despite NIB changing its story, this it seems is irrelevant to the ombudsman office.
     
  17. Butter

    Butter Frequent Poster

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    Much better than my speculations greenoverred! Thanks. It would be very useful for anyone else wanting to make to make a similar complaint.
     
  18. Tomorrow

    Tomorrow Frequent Poster

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    That would be great Greenoverred, and if want to see a copy of the ombudsman finding into my case, pm me your email address.

    The coverage today in the Indo is excellent and hopefully will help others to pursue action against NIB.
     
  19. greenoverred

    greenoverred Registered User

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    Ive edited my last post a bit. Ill post up the letters later today when I get the scanner up and running again
     
  20. twofor1

    twofor1 Frequent Poster

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    Could you post the reasons the Ombudsman gave for upholding your complaint.

    It would be interesting and useful to others to see why your case was upheld but other similar cases were not upheld.