Ulster Bank Refund for Interest Overcharge on commercial mortgages May 2019

Bronte

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AIB

They said their trackers would have cost around 7 %. How is that if it cost Ulster around 1%. And I see it’s costing Ulster .23% this month. ( I probably should not have fixed! )
 
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RedOnion

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I’m a bit confused though. Me and my husband are not an enterprise or entity
You don't have to be an entity.

Take a farmer for example. He's a person. If he borrows to buy farmland, the loan is for a business purpose. Therefore SME code applies. But if he borrows for home improvements then CPC applies.

The loan you've described is a classic business loan, so UB have obviously classed you as a business customer, for that loan.
 

Bronte

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Prarse Doherty

He’s really super. Note to Pearse, ask the bank if any customers of the 18,000 the following:

- how many got letters in 2012
- would customers have realised the ads applied to them
- how many complained about the rate going up
- ask fir the ads, were they clear rates were going up
- how many complaints got a final response letter
- how many took a case to the ombudsman
 

Bronte

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You don't have to be an entity.

Take a farmer for example. He's a person. If he borrows to buy farmland, the loan is for a business purpose. Therefore SME code applies. But if he borrows for home improvements then CPC applies.

The loan you've described is a classic business loan, so UB have obviously classed you as a business customer, for that loan.
Ok, got it.

As I said it was a ‘new’ method to shovel the money out to customers. That’s how the banker was describing it to me when I met him, he was in high glee, explaining it was a way to avoid doing a proper mortgage. I was amazed, he also wanted to give me 100%. Never borrowed money so easily. Down the years on here I mention my amazement at the carry on.
 

Bronte

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I've requested

- how the bank made the calculation of the refund
- costs for an independent consultant to calculate if the bank has charged me the correct rate of interest from day one

Questions

1. If it turns out that I overclaimed interest is say 2013 on my tax return, does that mean I'm liable for penalties and interest to revenue? And if yes, is it not the bank that should have to pay this.
2. Who should I get to calculate my mortgage interest from day one, any idea as to costs?
3. Who or what is a company called First Source
4. Anyone ever hear of a SARS request, apparently it's Subject Access Request

Note
I found out that although the bank is giving me 3% interest on my refund, other people, in business, who had overdrafts, that it's more complicated for them. Because they would have drawn down more overdraft than was needed if the calculation on the loans had been correct. I'm assuming then the bank has to make a separate calculation for those customers, and then they'd be due the over draft interest back, plus interest on that.

AAM

Is there anybody on AAM who is going through this process and would be prepared to let me know by PM what they have done as regards this.
 

elcato

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If it turns out that I overclaimed interest is say 2013 on my tax return, does that mean I'm liable for penalties and interest to revenue? And if yes, is it not the bank that should have to pay this.
What are the chances of the taxman ever knowing about this ? Even if they did it they would have to accept that it was something you didn't know about and would be very harsh to seek penalties and interest. I'm sure the pedants here will have a different view though.
 

RedOnion

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@Bronte
There are only a few companies that I've ever seen write decent reports (I work on the bank side in redress cases).
The going rate is about 1270 per account, but it varies with complexity. In your case, the complexity is checking how they've calculated the new rate. The refund bit is straight forward once you accept that as being right. Unfortunately I'm a bit tied up at the moment, or I'd have a look at it for you.
3% is probably fair. If I understand correctly, this is on top of providing you 'time value of money' at the rate applicable to the account?
You could claim for more if you borrowed at more expensive rates elsewhere.

Re tax, there are no penalties. I understand you put through the refund as a reduction in your interest expense this year.

You're talking about a DSAR - data subject a cess request. Under GDPR you've a right to access your data.

First Source is a fairly large global outsourcing company.
 

Metatron

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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 was much easier they told me than my having a normal investment mortgage. How it works is they loan me the money. Let's say 100K. And I pay a 'margin' plus the prevailing interest rate (called cost of funds). It's cheaper than normal investment mortgages. In the early years they sent me an annual statement, and this showed the 100K, and it reducing with capital and interest as though it were a normal bank account overdraft. With a fluctuation in interest rate every two weeks. I also was able to 'fix' the rate, which I'm now on currently. Then they didn't send me that overdraft type bank statement. Nothing for a year or two. But more recently (due to some new banking rule I believe) they just sent me a one page document with the amount owing at the beginning of the year, the monthly repayment and balance left.
I have read the attached refund letter you received from Ulster Bank, surely if they did something that was not allowed pursuant to “some business lending facilities”, then it is a breach of contract, plain and simple and not an overcharge event as claimed by Ulster Bank.

I also looked at the definition of what the cost of funds consists of, this included reference to a variable rate element, the 3month Euribor rate, this is an external reference rate as described by the Central Bank of Ireland Tracker Mortgage Examination document (December 2015). Therefore, would it not have been incumbent on Ulster Bank to submit these affected borrowers into the Central Bank Tracker Mortgage Examination and have all the mortgage loans affected reviewed by an independent third party (the oversight part)?
 

Metatron

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@Bronte
There are only a few companies that I've ever seen write decent reports (I work on the bank side in redress cases).
The going rate is about 1270 per account, but it varies with complexity. In your case, the complexity is checking how they've calculated the new rate. The refund bit is straight forward once you accept that as being right. Unfortunately I'm a bit tied up at the moment, or I'd have a look at it for you.
3% is probably fair. If I understand correctly, this is on top of providing you 'time value of money' at the rate applicable to the account?
You could claim for more if you borrowed at more expensive rates elsewhere.

Re tax, there are no penalties. I understand you put through the refund as a reduction in your interest expense this year.

You're talking about a DSAR - data subject a cess request. Under GDPR you've a right to access your data.

First Source is a fairly large global outsourcing company.
Hi Red Onion,

You appear to be very knowledgeable about banks. Is the post I sent to Bronte correct, should Ulster Bank have included this cohort in their mortgage tracker numbers for the Central Bank? If so. the numbers affected rise by 18,000 and secondly and more importantly should Ulster Bank have employed an independent third party regarding oversight on redress etc?
 

RedOnion

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Can anyone answer my last post, cats appears to have caught their tongues!
Hi Ides,
I didn't understand the question / connection. There were 18,000 business customers with an overcharge. They were refunded. A small number of cases were for property ( including Bronte's case). I understand there was no mortgage in this case. I'm not sure how the business loan was secured. So I'm not even sure if this specific case falls under remit of tracker review?
You might share your views?
 

Metatron

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Hi Ides,
I didn't understand the question / connection. There were 18,000 business customers with an overcharge. They were refunded. A small number of cases were for property ( including Bronte's case). I understand there was no mortgage in this case. I'm not sure how the business loan was secured. So I'm not even sure if this specific case falls under remit of tracker review?
You might share your views?
Huh?

Red Onion,

Ulster Bank, on my reading of the refund letter, did not have the contractual right to change its definition of its bank cost of funds within the contract, but they changed it anyway, that’s a breach of contract in anyone’s book. However, the banks cost of funds is defined and is partially based on the Euribor rate. This is a publicly quoted rate that comes within the Central Bank of Ireland’s definition of what a tracker rate can be. The Central Bank has defined “In-Scope Mortgage Accounts” as including both Private Dwelling Houses
and Buy to Let properties. Therefore. if I purchase a property to let out (like a warehouse/ office) I should be included in the examination, thats it really. What is your view on this or am I completely barking up the wrong tree.
 
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RedOnion

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“In-Scope Mortgage Accounts”
I don't see where it was established that there's a mortgage?
It was a business loan, that was used because it was quicker than underwriting a mortgage?
I'm not too familiar with the exact circumstances, other than answering the questions raised by Bronte. But the majority of these 18,000 business loans surely had nothing to do with property in any case?
 

Metatron

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My friend got one of these refund Cheques and her business loan was secured on an office she got the loan for. Maybe Bronte could shed some light on what their loan was for and was there a mortgage over same. What I am asking is, if the business loan was secured by way of a mortgage, should this type of loan have been included in the CBI Tracker Examination? The thread does say commercial mortgage.
 

Metatron

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I don't see where it was established that there's a mortgage?
It was a business loan, that was used because it was quicker than underwriting a mortgage?
I'm not too familiar with the exact circumstances, other than answering the questions raised by Bronte. But the majority of these 18,000 business loans surely had nothing to do with property in any case?
Red, the thread does say commercial Mortgages.
 

Metatron

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Sorry, I missed the reference to office.
I understand the in scope mortgage accounts for tracker examination were only those for residential property.
Red,

The framework document from the CBI specifically states the following:

“3.2.1. In the course of the Examination the lender is to review all mortgage accounts in respect of both Private Dwelling Houses and Buy to Let properties”

Surely the CBI would have specifically used the term “buy to let houses” in their description of In Scope Mortgage Accounts within their framework document if they were referring to residential property only, but it did not.
 

RedOnion

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Red,

The framework document from the CBI specifically states the following:

“3.2.1. In the course of the Examination the lender is to review all mortgage accounts in respect of both Private Dwelling Houses and Buy to Let properties”

Surely the CBI would have specifically used the term “buy to let houses” in their description of In Scope Mortgage Accounts within their framework document if they were referring to residential property only, but it did not.
Ah, you know more about this than I do.
I'll leave you to it.
 
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