Ulster Bank's proposal to deal with offset mortgages

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Puddle duck said:
The challenge is so few people actually understand this product so solicitor/ financial advisor might be hard to find - no idea where to start but happy to join a group. Also is it strange that nothing is in the press about this?
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Well we should put up what we know. So the first thing that I know is that Ulster bank thinking they can apply a single metric with regards to the future finances of 4500 mortgage holders is all I need to know to see that they are trying a quick one. They are going to have to allow for the maximum amount that could be saved in each of these mortgages otherwise they will be open to a legal challenge and ultimately if enough people get on board it could derail their plans to exit the Irish market. They are under the gun now time wise all people have to do is say no thanks I want the max and they will have little choice but to oblige
 
The letter has left me with more questions than answers TBH

How can they use previous offsetting to base future offsetting, Some people I for one will be coming into inheritance and would have used same to offset a large portion of my balance.

Also something that has come to light looking further into this for me anyway is that i had 2 small top ups for small building works in the early yrs of my mortgage on my current account mortgage. These 2 where consolidated into one account by UB during the change from First Active. I have noticed just now (Thick me) that these no longer are classified as offset that they were while with FA
 
BaldyBuddha said:
The letter has left me with more questions than answers TBH

How can they use previous offsetting to base future offsetting, Some people I for one will be coming into inheritance and would have used same to offset a large portion of my balance.

Also something that has come to light looking further into this for me anyway is that i had 2 small top ups for small building works in the early yrs of my mortgage on my current account mortgage. These 2 where consolidated into one account by UB during the change from First Active. I have noticed just now (Thick me) that these no longer are classified as offset that they were while with FA
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Do you have any of the original documentation regarding the initial top ups? Are you sure they were offset/CAM or were they just ordinary annuity top ups, I don't think there was a CAM top up product, check back and see, the last 4 digits of the account numbers would be 5001/2 if CAMs, if starting with 84/94/95 they are ordinary mortgages (and maybe a few other numbers I can't remember!)

Edit: it's a big long number with / before last 4 digits, the end bit is the product type.
 
From reading their docs is my understanding correct? right now, I am actually -10K, between balance of my loan and facility. This is not arrears but due to the fact that we topped up our mortgage 2yrs ago our repayments are out of synch with the facility reduction reviews. Maybe a unique situation. But under 'pay and draw' ... if I were to lodge 20K, would I only be allowed to withdraw 10K? If so, this is very different to offset.
 
Puddle duck said:
From reading their docs is my understanding correct? right now, I am actually -10K, between balance of my loan and facility. This is not arrears but due to the fact that we topped up our mortgage 2yrs ago our repayments are out of synch with the facility reduction reviews. Maybe a unique situation. But under 'pay and draw' ... if I were to lodge 20K, would I only be allowed to withdraw 10K? If so, this is very different to offset.
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That I am not clear on either, it links the 'pay and redraw' option with reference to the available facility, it is not clear to me that if you lodged extra money to your mortgage would that increase the AF too or sits in a different column on the mortgage.

So if you had AF of 10k, lodged 20k for 6 months, can you then only redraw 10k or 30K?
 
peemac said:
They should be no tax implications as it is compensation for a loss or potential loss and as such is exempt from tax.
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I am going to ask my accountant about this too.
I'm not sure if it's the exact same scenario as in the tracker mortgage 'scandal'.
As you are being "compensated" for stuff that might happen in the future rather than stuff that did happen in the past.
 
RichInSpirit said:
I am going to ask my accountant about this too.
I'm not sure if it's the exact same scenario as in the tracker mortgage 'scandal'.
As you are being "compensated" for stuff that might happen in the future rather than stuff that did happen in the past.
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I think the issue is how everyone has been calculated on the past when they cannot tell you how your future finances will be that is just not realistic and I can see a huge section of these mortgage holders fighting this as it will save them more by keeping the current system in place
 

Are Ombudsman Rulings & Bank Goodwill Gestures deemed taxable income

Hello, Happy New Year, to you all. If the Ombudsman maks a ruling in the customer's favour, to include order for payment of compensation by a financial institution, is it deemed taxable income (and subject to declaration, in the customer's personal tax returns?)? Also, if a financial...
www.askaboutmoney.com

Not sure if it's quite the same but does include goodwill gesture
 
Something has just occured to me and I think anyone ringiing should be asking this question.
How can Ulser bank use a predictive curve to guess the interest rate over a period of time so in effect a prediction and with the best will in the world the markets cant even predict this correctly and not just the best guess which is what we are currently paying not the 4% that is being used and then base the amount of goodwill/compensation you will be getting based on figures from the past and not looking at the facts that people are in the round about 20 years older than when the mortgage started so they are now closer to retirement (lump sum) with their parents closer to the average age for life expectancy and in a lot of cases over it (meaning inheritance), that in itself will leave this arrangement open to a court case. They cannot use something in the past for one metric and one in the future for another with out there being a conflict with regards to their paradigm for calculating what is basically compensation for a breach of contract. If they could of done this legally they would of done so years ago. Sure the argument could be made they plucked the figures for these out of their asses or in order to minimize the payout they will be on the hook for.
 
fliball123 said:
Something has just occured to me and I think anyone ringiing should be asking this question.
How can Ulser bank use a predictive curve to guess the interest rate over a period of time so in effect a prediction and with the best will in the world the markets cant even predict this correctly
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Mortgages Support

Ulster Bank is closing. For help and support with your Mortgage queries visit the Mortgages page on our dedicated Customer Support Hub. We're here to support you through this change.
www.ulsterbank.ie www.ulsterbank.ie
Interest rates are unpredictable - why do you think that you can predict them?

No one can predict the future with absolute certainty. We have taken a capital markets yield curve which forecasts what wholesale interest rates will be in the future, and used this as a proxy for the future ECB rate that you may pay on your mortgage. This proxy yield curve is a prediction of what ECB base rates may be in the future, which is the reference rate for the loan. The approach we have used is a market standard approach to estimating future interest rates.

However, we recognise that actual future interest rates may not be the same as the forecast interest rate that we have assumed for your loan. To take account of this, we have doubled the base goodwill payment to you subject to your ex-gratia goodwill payment not exceeding the full amount of future mortgage interest that we have estimated you would pay over the remaining life of your mortgage based on our estimate of the future interest rate on your loan.

Additionally you can avail of the Available Facility feature to reduce the amount of interest you pay on your mortgage loan. While this is a bit different to offsetting credit balances, you can reduce your future mortgage repayments by paying in money against your mortgage balance. You can then draw those funds back out again at a future date subject to staying within your overall Facility Limit. This would allow you to replicate the key benefits of offsetting interest and your repayment, whilst still having access to your funds if you need them in future.
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ClubMan said:

Mortgages Support

Ulster Bank is closing. For help and support with your Mortgage queries visit the Mortgages page on our dedicated Customer Support Hub. We're here to support you through this change.
www.ulsterbank.ie www.ulsterbank.ie
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Yeah I understand what they are saying but I still cant see them getting away with coming up with a formula that us cherry picking one element base on a past trend (the amount in the indiviuals offset account) and than an element that is based on a predication in the future and then refusing to entertain future events that may impact the amount a person has in their offset account for any period during the mortgage. The very fact that they used the future to predict the interest rate as part of this calculation means that they cannot just ignore the future when it comes to the amount in the offset facility they have set a precedent and it will be challenged under the law I have no doubt about that.
 
fliball123 said:
Yeah I understand what they are saying but I still cant see them getting away with coming up with a formula that us cherry picking one element base on a past trend (the amount in the indiviuals offset account) and than an element that is based on a predication in the future and then refusing to entertain future events that may impact the amount a person has in their offset account for any period during the mortgage. The very fact that they used the future to predict the interest rate as part of this calculation means that they cannot just ignore the future when it comes to the amount in the offset facility they have set a precedent and it will be challenged under the law I have no doubt about that.
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I think you're focussing on the wrong thing. You're getting into the weeds on the process they used to come up with the goodwill payments. Whereas the crux of the issue is whether they have breached the contract or whether they are entitled to remove the offset capabiltity. That's it.

If they are legally entitled to remove the offset capability, then all the talk about the calculations for goodwill payments is kinda immaterial. If they didn't breach the contract they are not obliged to provide any compensation, period. All they need to say is "We recognise this change, that we are legally entitled to make, will cause inconvenience for customers. As a gesture of goodwill we will make a goodwill payment to customers in light of this inconvenience. The process we used to calculate the value of these payments, while not perfect, is the fairest we could think of"

That's all they need to do.
 
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fliball123 said:
Yeah I understand what they are saying but I still cant see them getting away with coming up with a formula that us cherry picking one element base on a past trend (the amount in the indiviuals offset account) and than an element that is based on a predication in the future and then refusing to entertain future events that may impact the amount a person has in their offset account for any period during the mortgage. The very fact that they used the future to predict the interest rate as part of this calculation means that they cannot just ignore the future when it comes to the amount in the offset facility they have set a precedent and it will be challenged under the law I have no doubt about that.
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To play devil's advocate they've taken the best predictor of future rates (the yield curve). Like it or not we are creatures of habit so previous form is probably as good an estimate as you can come up with for the collective behaviour of 4,500 individuals. Neither are perfect but nor is it likely that there is a systematic approach that will be more accurate.

Of course they know this isn't perfect so they've tried to cover all bases by doubling the goodwill.

Whether they've gone far enough in all cases, who knows. However, it would seem that given their desire to exit the market, it's at least plausible they might consider revising up the goodwill figure if you can present them with evidence that your behaviour might have changed in the future.
 
aoraki said:
I think you're focussing on the wrong thing. You're getting into the weeds on the process they used to come up with the goodwill payments. Whereas the crux of the issue is whether there have breached the contract or whether they are entitled to remove the offset capabiltity. That's it.

If they are legally entitled to remove the offset capability, then all the talk about the calculations for goodwill payments is kinda immaterial. If they didn't breach the contract they are not obliged to provide any compensation, period. All they need to say is "We recognise this change, that we are legally entitled to make, will cause inconvenience for customers. As a gesture of goodwill we will make a goodwill payment to customers in light of this inconvenience. The process we used to calculate the value of these payments, while not perfect, is the fairest we could think of"

That's all they need to do.
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The problem I see for Ulster is they are not answerable to the ECB or CBI so if they did try this the mortgage holder could simply withdraw their cash, cash in on the faculty account and forego payments for the remainder of the mortgage. We in here in Ireland do not do "family home repossessions" and from the last crash there are still a fair chunk of people in the "family home" not paying a cent on their mortgage. So if they did shake this stick at people the most 4500k mortgage holders will lose is 56million if the mortgage holder retaliates and decide to default on the mortgage they could lose a multiple of this not to mention the knock on effect to another bank trying to buy. So they have a lot more to lose by not entraining legitimate concerns with regards to how the goodwill was calculated.
 
fliball123 said:
The problem I see for Ulster is they are not answerable to the ECB or CBI so if they did try this the mortgage holder could simply withdraw their cash, cash in on the faculty account and forego payments for the remainder of the mortgage. We in here in Ireland do not do "family home repossessions" and from the last crash there are still a fair chunk of people in the "family home" not paying a cent on their mortgage. So if they did shake this stick at people the most 4500k mortgage holders will lose is 56million if the mortgage holder retaliates and decide to default on the mortgage they could lose a multiple of this not to mention the knock on effect to another bank trying to buy. So they have a lot more to lose by not entraining legitimate concerns with regards to how the goodwill was calculated.
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But they will have recourse to the ECB and CBI, right up until they leave. And they will leave when they sell the offset mortgages to another bank. And guess what, whichever bank or vulture fund buys those offsets, that bank will also have recourse to the ECB and the CBI.

If you want to play chicken with a bank about witholding mortgage payments, with all the years of litigation that would entail and a looming possibility of losing your house, go right ahead. But it's monumentally bad advice.
 
aoraki said:
But they will have recourse to the ECB and CBI, right up until they leave. And they will leave when they sell the offset mortgages to another bank. And guess what, whichever bank or vulture fund buys those offsets, that bank will also have recourse to the ECB and the CBI.

If you want to play chicken with a bank about witholding mortgage payments, with all the years of litigation that would entail and a looming possibility of losing your house, go right ahead. But it's monumentally bad advice.
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Yeah but would the damage be done I think the remaining mortgages are worth 5/6 times what they are paying out in these goodwill gestures if there is a lot discord with this process and legal cases pending I dont think they can just cut and run and will have to see these out and how much more do you think Ulster will have to drop the price to off load under these circumstances and remember they have a very limited selection of buyers that are there in Ireland and they are under the gun here to get out before having to renew their Irish banking license. As I say they have a lot more to lose by not engaging. Its not playing chicken its something that their risk analysis will no doubt have showed up.
 
The previous T&Cs are dated from April 2023 but we were never sent these T&Cs, I never got a copy or I never got a copy of the previous version of the T&Cs i.e. before April 2023, did anybody else. There seems to be something suspect going on with how UB are changing the T&Cs
 
here is the original or what we all signed up to
 

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