Ulster bank over charge - 4 times - on Business loan to purchase investment property

B

Bronte

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Property purchased during the height of the Celtic Tiger 2005 and went to Ulster for an investment mortgage but they suggested this type of 'loan' to me because it was way easier to get me the money. Something about it being easier to avoid the rules of mortgage lending. Interest rate was excellent so I went for it as I paid a 'margin' of 1.6%. Over the Cost of Funds.

History

Purchased with a Facility letter. Paid same amount monthly. I borrowed more for renovations in 2006, which was added to the loan and I was on a fixed rate of 3.21% with a margin of 1.6% in 2006. Title changed from Loan to Loan Fixed Int. The monthly amounts were set.

October 2014

Account statement shows the overdrawn balance, and then that's all 'paid off' by Chap/International. with Interest to close. And account is zero. Plus an account closed final document.

Everything changed as regards formalities when I fixed in 2014 and there was a much more complicated procedure. More so than getting the initial loan. Cost of funds were now about 1% plus my margin of 1.6% Referred to as 'loan' and 'facility' in docs, plus Capital Markets, hedging, capital markets terms of business. I was sent an amortisation able. Rate was great so all good.

I have their definition of Cost of Funds.

An annual review was carried out whereby I'd to prove our incomes.

I fixed again in 2019, the credit facility letter was now a lot longer. Rate was Cost of Funds .36% plus my margin of 1.6%

When the fix was up this year I was denied a new fix because there was no 1 or 2 year rate, there was a 5 but I didn't have enough time left for that. Which pretty well annoyed me. Loan transferred to AIB this year.

Statements

My mortgages sent me an annual statement of interest. This type of loan does not so I requested one. It was incorrect the second year so I asked them for a correct one. Sometimes it was different forms. Mentioned 'Bus Term Loan Cap&Int Account. Other times it was just 'loan'.

I received a bank statement with the amount borrowed as OD (overdrawn). My monthly amount is in lodgements and the interest and capital amount is as 'withdrawn. Interest is in varying amounts initially, quarterly. May/August/November. Looks like a normal bank statement. A4. But it did not look like my smaller monthly bank statements for my UB current account. In October 2006 the statements were now no longer A4.

I got a table for 5 years when I fixed in 2014 from Capital Markets which outlines the fixed rate and how much is capital and how much interest.

I chased up and got an interest certificate (needed for my rental tax returns)

From Jan 2010 to Jan 2014 I received a document with the interest rates outlined monthly. But not 1st to 31st month. So 18 Jan 2013 to 7 Feb 1.43%. 10 Jan 2014 to 17 Jan 1.05%.

At some stage in 2019 I was variable and got emails every couple of weeks driving me bonkers. Title EUR Loan Rollover with Decrease. (and Fixed rate Option Euribor Loan) Which has a rollover amount (the capital) and the interest. For say a month eg 4 Oct 2019 to 3 Dec 2019. With also an effective date. and new rollover with the payment subtracted I assume.

As I hated that I fixed again in 2019 and received a new amortisation table bringing me to Nov 2022. My annual loan statement were now A4 again. With monthly payments and called Repricing.

I was sent a table in 2016 onwards, which had Principal balance refinancing in Jan 2016 and ends with principal balance at year end, showing monthly payments.

Refunds - 1€10,500 in 2012

In mid 2012 my relationship manager said my name/account had come up at a meeting and he noticed there was something wrong with my account. My loan had been transferred to Business Banking. Previously it was the Commercial Division (I had no clue about any of this). This phone call came up as a result of the annual review.

I received an email with the refund calculated manually. From Feb 2010 to June 2012. And my account was credited with the refund. Basically 11 credits of interest amount circa 1K quarterly it looks to me. I never understood it but said to myself I'll deal with this in the future.

Subsequently it was explained as an error as they incorrectly applied a fixed rate from 5 Jan 2010 to 13 June 2012.

Refund 2 - 2019 - €1100

Letter says "there was an interest overcharge. Due to 2012 definition change of Cost of Funds. A variable component. And my rate on my account from 26 April 2012. And that the legal rules didn't allow this for my type of loan. Causing an overcharge. Despite my being on a fixed rate"

They gave me a refund of overcharge of €949 from 14 June 2012 to 4 Nov 2014. And threw in an addition €161 to make me feel good about it. Called Additional Interest. And 'compensation'. yippedy do da. There was no physical way a mere mortal like me could figure out how they came up with those figures.

So I foolishly went into battle with them because I use interest paid as a tax deduction on rental tax returns. I have my phone calls and emails etc. I argued Ulster should pay an advisor to

a) check all interest charged on the account from year 1
b) pay an accountant to redo my tax returns for all years involved. Obviously the bank refused because they could not care less.
c) I also argued my compensation amount. Why should they compensate me at 3% when they are charging customers 20% on overdrafts etc.

Result was nada. Their view that it was up to me to pay an advisor/accountant. And I lost the will to live dealing with them. Which I well know is a commercial tactic. (I took them all the way to the ombudsman on another account, lost most of it but got compensation for their handling. If it were now I believe I would win as the new ombudsman was not in hock to the banks)

Refund 3 - 2019 €67

Was because Refund 2 was not calculated correctly. Wrong dates used.

Refund 4 May 2013 - €700

Was because Refund 2 and 3 were not calculated correctly. "not rounded down to the nearest one twentieth of one percent"
 
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Questions:

- Does anyone here understand any of this
- Does anyone else have any experience of this
- Surely I should have a detailed statement from loan beginning to loan end to recalculate everything in one go to see if it were done correctly.
- And I should not have to pay for this.
- What about my rental income tax returns. There is absolutely no way I'd be able to figure out this per tax year, and I do not want to go back more than a decade. Opinions please.
 
Hello Bronte,

What you've described is not particularly uncommon, albeit it sounds like you've had a particularly difficult run.

The Bank had various internal re-orgs., over the years, which resulted in departments being relocated, renamed (ie Commercial Banking / Business Banking / SME Banking). Don't read anything into that, with regards to your own situation. If you were ever assigned to either "CDS", or "GRG", that may have had certain implications, however.

Ulster Bank has identified various errors made, and issued communications in relation to same, along with arranging refunds, over the years. That's not to say that the letters are always easily read, as they are often written by "legal eagles". Compensation, in addition to refunds, is typically calculated based on the likely deposit rate for the prevailing period (ie what you might have been able to earn, had you not paid the additional, incorrect, repayments), plus a "goodwill" gesture. You were not in a position to provide money at a 20% loan rate (unless you can prove otherwise), for example, so I'd suggest you don't use that particular reference, and instead highlight that you believe the compensation to be inadequate, due to.... (duress, opportunity lost etc.)

The bank housed its fixed intetest rate (commercial / business banking) loans on a different system to it's variable rate loans. The systems were not compatible, so required the creation of a new account number, different format "statements" (fixed repayment schedules, when you fixed the rate) etc.

If I were you, I would start by making a formal complaint. You can do this by contacting their complaints team, directly (you'll find a phone number online). You'll need to go through this complaints process, before the Ombudsman's Office will review the situation for you.
 
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RedOnion said:
Re: 'refund 2'

Ulster Bank Refund for Interest Overcharge on commercial mortgages May 2019

Much to my surprise I've received a letter from Ulster Bank with a refund cheque. Has any other poster had this experience. My 'mortgage' is unusual. It's actually a type of loan to purchase an investment property. I went looking for a mortgage and the bank decided to do it this way as it...
www.askaboutmoney.com
Click to expand...
I've had 4 refunds and am wondering how common these errors are. Plus I don't actually have any faith in Ulster calculating anything correctly. This thread pulls in all the refunds. To give a more holistic view.
 
Bronte said:
I've had 4 refunds and am wondering how common these errors are.
Click to expand...
Your commercial loan is a bespoke agreement. Everytime there was a change made to it, it was manual. As @MrEarl says your loan even moved between 2 systems. Mistakes happen once there's manual intervention. Simple things like interest capitalising monthly rather than quarterly (which is possibly what 'refund 1' was?).

The 'refund 2' covered a large number of loans. Basically UB assumed that all contracts allowed them to change the construction of 'cost of funds', but yours was one of about 30% that didn't.
Refunds 2, 3 & 4 are all caused by the same thing. Most customers who got thd first got them all:
They refunded. Somebody complained, UB agreed with customer and then recalculated for everyone. Then somebody else complained about the number of decimal places used in calculation, again UB agreed and recalculated for everyone.
 
MrEarl said:
If I were you, I would start by making a formal complaint. You can do this by contacting their complaints team, directly (you'll find a phone number online). You'll need to go through this complaints process, before the Ombudsman's Office will review the situation for you.
Click to expand...
Thanks for the explanation about the systems. I asked Ulster for a breakdown of the calculations. And received a letter after 4 weeks about it. Most of it was a rehash of my previous 2019 complaint. I received a 29 page letter for 2019. About 25 of those are a line by line daily calculation. Which I don't recall getting before. That letter gave me an extra €500 compensation as they could not find a record of what transpired in 2012. At that time I was sent a 'screen shot' pretty basic calculations.

- I don't understand when they do a recalculation, and send a letter, why they don't send the actual calculations.
- I've no idea if it's correct.
- I've no faith now that anything is correct.
 
RedOnion said:
Your commercial loan is a bespoke agreement. Everytime there was a change made to it, it was manual. As @MrEarl says your loan even moved between 2 systems. Mistakes happen once there's manual intervention. Simple things like interest capitalising monthly rather than quarterly (which is possibly what 'refund 1' was?).

The 'refund 2' covered a large number of loans. Basically UB assumed that all contracts allowed them to change the construction of 'cost of funds', but yours was one of about 30% that didn't.
Refunds 2, 3 & 4 are all caused by the same thing. Most customers who got thd first got them all:
They refunded. Somebody complained, UB agreed with customer and then recalculated for everyone. Then somebody else complained about the number of decimal places used in calculation, again UB agreed and recalculated for everyone.
Click to expand...
Well I'd never any clue it was a bespoke agreement. And that everything was manual. Sounds like a nightmare to administer. How is a bank, with multi millions, incapable of having a system to deal with all these 'bespoke' products.

What is 'thd'?

You're not giving me much faith that Ulster are able to calculate anything correctly. Ever. How do I know they now have.

Which brings me back to:

- Should they not pay for me to get an independent expert to do the calculations
- Shouldn't Ulster pay my accountant to fix my rental tax returns. I've literally no clue now per year what interest rate actually applied. From a revenue point of view I can prove what I've paid, via the Ulster Bank annual statement, but revenue don't know about the refunds.

But if Revenue ever did query it, that I'd be liable for penalties and interest would I not.
 
hubble said:
I have a very similar knowledge of this with the bank mentioned.
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For those that might not understand why it's so complicated, in the letter Ulster link me to this

Historic cost of funds | Ulster Bank

Cost of Funds Historic Rates
www.ulsterbank.ie www.ulsterbank.ie

Now how on earth could I ever check my loan over 20 years based on that. Just take one year, 2012, there are 4 different rates per month, on weird days.
 
Bronte said:
- Shouldn't Ulster pay my accountant to fix my rental tax returns. I've literally no clue now per year what interest rate actually applied. From a revenue point of view I can prove what I've paid, via the Ulster Bank annual statement, but revenue don't know about the refunds.

But if Revenue ever did query it, that I'd be liable for penalties and interest would I not.
Click to expand...
Talk to your accountant, but my non professional view:

The fact it was a commercial loan rather than a traditional mortgage doesn't change the fact it was covered under CBIs tracker mortgage examination (TME) and therefore tax issues are for the lender.

Income tax implications for landlords with buy-to-let mortgages who have received tracker mortgage redress payments from banks

In view of the fact that lenders are to liaise directly with Revenue, individual taxpayers affected do not have to take any action.
www.revenue.ie www.revenue.ie

But, if he's not in agreement, then why not just treat the refund as a reduction of interest in the year you received it? I don't see the reason to overcomplicate this, unless you're talking about 10s of thousands.

Bronte said:
- Should they not pay for me to get an independent expert to do the calculations
Click to expand...
Do you think they should? You took out a business loan, as a business person, so the treatment is different to a personal / consumer situation.
 
RedOnion said:
Talk to your accountant, but my non professional view:

The fact it was a commercial loan rather than a traditional mortgage doesn't change the fact it was covered under CBIs tracker mortgage examination (TME) and therefore tax issues are for the lender.

Income tax implications for landlords with buy-to-let mortgages who have received tracker mortgage redress payments from banks

In view of the fact that lenders are to liaise directly with Revenue, individual taxpayers affected do not have to take any action.
www.revenue.ie www.revenue.ie
Click to expand...
Well I never knew that. Ulster never mentioned that to me. Because all the tax returns would be incorrect for all the years. In my case nearly 20 years of rental income tax returns. I have no other tax returns in Ireland.

And Ulster said it was a matter for me.

That:

"your tax affairs are your responsibility"
"Ulster will therefore not cover any cost of any advice"

And they specially referred to their pointing out to me for Refund 2 that I should consider seeking independent legal, financial and tax advice.

That is not what you are saying.

Did Ulster then settle a tax bill for customers like me? What happened between Ulster and Revenue. Can I find out. I do not recall reading anything at all about this. Is it on here in AAM?

I've never had a tracker, but great if what you say is true.
 
RedOnion said:
But, if he's not in agreement, then why not just treat the refund as a reduction of interest in the year you received it? I don't see the reason to overcomplicate this, unless you're talking about 10s of thousands.
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If who is not in agreement?

I don't have an actual figure per year. Not in comparison to what I declared to revenue, which was what the Ulster bank sent me with the annual amount of interest. Which I sought specially for my tax returns. I was relying on Ulster's documentation.

In simple terms I've overclaimed interest as a deduction, no it's not a large amount. But if my tax returns are wrong, going back in time, than penalties and interest can be huge.

Surely there are other people like me who are in the same boat. Or is revenue, Ulster and the taxpayers all ignoring this.
 
RedOnion said:
Do you think they should? You took out a business loan, as a business person, so the treatment is different to a personal / consumer situation.
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Yes I think they should. They did everything wrong with it. On many occasions. I didn't even realise it was a business loan when I took it out as I'd applied for a mortgage to purchase an investment property. X told me it was just an easier way to give me the money. There was no explanation of anything. Years later this all changed, and there was amazing hoops to fix the interest rate. It has to be a certain time on a certain day, they had to phone my husband separate to me, reams of documentation.

And they have no clue what happened when I got my first refund. Which was why they paid me an extra 500 as compensation.

Do you not think they should pay for my accounts to be redone, and for their calculations to be checked?

Ironically one of the grounds for refusing me payment for independent advice was:

"we are satisfied with our remediation calculations, and your refund amount has been tested and validated to ensure that it fairly corrects the overcharge on your account"

So much for anyone relying on that, since they've given me 2 further refunds as that one was wrong.

I don't trust them to add 2 +2

Their 'remediation calculations were wrong.
And their 'tested and validated' is just meaningless words.

They should have brought in actual people who can add up interest on 'bespoke' loans. Seeing as they, a bank, found it impossible to do.
 
RedOnion said:
They did. A large audit firm was involved in the end.

I feel I've helped you all I can here.
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You make me laugh. What's to say I'll not get another refund next year ! When someone else argues the latest recalculation

Yes you've been very helpful. It has made me understand it a lot better. And I do appreciate it.

And mostly that banks aren't to be trusted to handle lending properly. Literally their raison d'etre. This is not the first time Ulster gave me money. I got a couple of letters of refund with miniscule amounts too at some stage, but not to do with this loan.

For me this no longer really matters, but it must have been very serious for many people, where this kind of a mess resulted in massive overcharging. You could go out of business for things like this.
 
On the tax returns, you do not need to redo them.

Presumably in 2012, you your tax return was something like

Rental income €30,000
interest charged: 14,000
Less interest refunded by UB: 10,500
Net interest charged: 3,500
Rental profit 26,500

Likewise for 2019 and later refunds.

If you did not reduce the interest claimed by the refund, you should contact Revenue along the lines of - "I understood that this was a tracker refund and therefore that UB would sort out the tax. They are now saying that they won't. Accordingly, I have reduced the interest charged this year by €x".

Brendan
 
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