Brendan Burgess
Founder
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- 52,181
When I checked my balance online, there is a line "FSPO BAL REDUCTION" and a credit for €30,000! I haven't paid anything. Surely there is some mistake?
There is no mistake.
A group of us has been campaigning for some years on behalf of AIB customers who took out a fixed rate mortgage, between 2006 and 2008. When their contract ended, AIB should have offered them a tracker mortgage at the prevailing rate, but did not do so.
AIB denied that they had any obligation to these customers.
AIB denied that they had lost out as a tracker at the prevailing rate would have been much higher than the alternative rates available.
We took a test case to the Financial Services and Pensions Ombudsman who upheld our complaint in January of this year.
Under direction from the Central Bank, AIB has agreed to apply the Ombudsman's decision to all 5,907 impacted customers.
So "FSPO BAL REDUCTION" stands for "Financial Services & Pensions Ombudsman Balance Reduction"
So how was the write down calculated?
The Ombudsman decided that the appropriate redress would be
1) a write down today of 12% of the balance on the mortgage account as of the day the fixed rate ended when AIB should have offered you a tracker.
2) A refund of the interest on the 12% write down to be paid by cheque.
What? I will be getting more?
Yes, AIB will write to you with a cheque for the interest charged on the 12%.
The amount you will get will depend on a few issues - the date your fixed rate ended and whether you were on a variable or fixed rate since the date your fixed rate ended.
As a very rough guide - and it is very rough - the cash refund will be around 1/3rd of the write down on your mortgage. So if you got a write down of €30,000, you can expect a cheque for about €10,000.
If you have all the relevant information, you can calculate the exact refund using this calculator.
Will AIB put me on a tracker mortgage rate for the remainder of the term?
No.
Having considered all the factors in this unusual case, the Financial Ombudsman decided that the most appropriate redress would be to write down the balance by 12% and refund the interest charged on the written down amount.
What do I need to do now?
Nothing for the moment. Just wait until you get the cheque.
It's very odd that AIB has written down my mortgage balance without actually writing to me!
AIB's behaviour throughout this whole episode has been scandalous. From trying to defend the indefensible. To delay after delay. To writing down mortgages without telling people.
So will my monthly mortgage repayments reduce?
Yes. If you had a balance before the write down of €200k and you got a €40k, write down, your balance was reduced by 20% , and so your mortgage repayments will go down by 20% as well. The term will remain the same.
I thought you said that the write down was 12%?
It is 12% of the balance as of the date your fixed rate ended back in 2009 or 2010.
But the balance today should be a fair bit less if you have kept up your mortgage payments in the meantime.
I got a cheque for €1,615 out of the blue two years ago? Is it related to that?
Yes, that was AIB's attempt to "compensate" you for not offering you a tracker. The important thing about this was that it opened up the opportunity for the impacted borrowers appeal the case to the Ombudsman which is what happened and why they have now been obliged to pay everyone.
There is no mistake.
A group of us has been campaigning for some years on behalf of AIB customers who took out a fixed rate mortgage, between 2006 and 2008. When their contract ended, AIB should have offered them a tracker mortgage at the prevailing rate, but did not do so.
AIB denied that they had any obligation to these customers.
AIB denied that they had lost out as a tracker at the prevailing rate would have been much higher than the alternative rates available.
We took a test case to the Financial Services and Pensions Ombudsman who upheld our complaint in January of this year.
Under direction from the Central Bank, AIB has agreed to apply the Ombudsman's decision to all 5,907 impacted customers.
So "FSPO BAL REDUCTION" stands for "Financial Services & Pensions Ombudsman Balance Reduction"
So how was the write down calculated?
The Ombudsman decided that the appropriate redress would be
1) a write down today of 12% of the balance on the mortgage account as of the day the fixed rate ended when AIB should have offered you a tracker.
2) A refund of the interest on the 12% write down to be paid by cheque.
What? I will be getting more?
Yes, AIB will write to you with a cheque for the interest charged on the 12%.
The amount you will get will depend on a few issues - the date your fixed rate ended and whether you were on a variable or fixed rate since the date your fixed rate ended.
As a very rough guide - and it is very rough - the cash refund will be around 1/3rd of the write down on your mortgage. So if you got a write down of €30,000, you can expect a cheque for about €10,000.
If you have all the relevant information, you can calculate the exact refund using this calculator.
Will AIB put me on a tracker mortgage rate for the remainder of the term?
No.
Having considered all the factors in this unusual case, the Financial Ombudsman decided that the most appropriate redress would be to write down the balance by 12% and refund the interest charged on the written down amount.
What do I need to do now?
Nothing for the moment. Just wait until you get the cheque.
It's very odd that AIB has written down my mortgage balance without actually writing to me!
AIB's behaviour throughout this whole episode has been scandalous. From trying to defend the indefensible. To delay after delay. To writing down mortgages without telling people.
So will my monthly mortgage repayments reduce?
Yes. If you had a balance before the write down of €200k and you got a €40k, write down, your balance was reduced by 20% , and so your mortgage repayments will go down by 20% as well. The term will remain the same.
I thought you said that the write down was 12%?
It is 12% of the balance as of the date your fixed rate ended back in 2009 or 2010.
But the balance today should be a fair bit less if you have kept up your mortgage payments in the meantime.
I got a cheque for €1,615 out of the blue two years ago? Is it related to that?
Yes, that was AIB's attempt to "compensate" you for not offering you a tracker. The important thing about this was that it opened up the opportunity for the impacted borrowers appeal the case to the Ombudsman which is what happened and why they have now been obliged to pay everyone.
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