What is reasonable compensation for those affected by the tracker issue

gnf_ireland

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From another thread:
"PTSB paid automatic compensation of 10% of the amount overcharged.
AIB is paying 15% automatic compensation.

This is not an offer. It is not an estimate. It is, in effect, a down-payment."


What do people think if a reasonable level of compensation for the tracker issue as a general principle? Should it be related to the amount the person has been overcharged - i.e. a percentage of this - and if so, what percentage is fair? Should there be minimum and/or maximum amount set ? Should it be based on the duration of the over-payment, and when the bank alerted the person to the issue? Should the amount of calls to the customer, or the customer had to make, come into the calculation.

I accept the general level of compensation will not cover every scenario, and there will need to be some sort of mechanism to appeal this, but with 13,000-20,000 cases to get through, the general level would need to satisfy 80-90% of those.
It would also need to be relatively easy to calculate and validate and be a fair towards the customer.


I was personally subject to a 'bank miscalculation' recently from a foreign bank, and they offered to refund the difference + 8% per year 'interest' as compensation. I thought that was pretty fair, although the duration and amount was much smaller than the tracker issue
 

Brendan Burgess

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Let's be clear that the refund already includes interest.

Normally in cases such as this, only refunds are given. The Central Bank has got the lenders to agree to pay compensation to everyone.

If they had not done this, the borrowers would have had to apply to the courts for compensation.

I don't know if it's possible to come up with guidelines.

Let's take someone who really struggled, but managed to stay out of arrears.
Because they were struggling so much, they didn't bother trying to trade up.
Now house prices have increased, it would be much more difficult to trade up.

But then they would probably not have traded up if it meant losing their tracker.

It's very complicated which is why the Appeals Panels are the best way to decide.
 

odyssey06

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Whatever the compensation is set at, is should be multiplied by a % factor related to the number of years between when the overcharging started and when compensation is paid.

There has to be a penalty to the banks doing this... merely refunding the money they took illegally is no deterrent any more than getting a bank robber to return the money without any other penalty is a deterrent.
Plus, by multiplying it by the time duration, it acts as a deterrent to banks dragging their heels.
Banks which acted more swiftly and thereby reducing the stress and hardship on customers pay less penalty.

If I was on the appeals panel, that is the guideline that I would be following.
 

peemac

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Another poster suggested that the compensation should be at the banks own "unauthorised overdraft" surcharge rate on top of the inetrest.

For Ulster Bank this is 9%

So an overcharge of 32k would probably mean a surcharge interest of about €7,000 based on a simplified 4,000 / year overcharge

Therefore a fair headline rate would be 20-25% of the overcharge.

The advantage of using the unauthorised overdraft rate is that you are using the bank's OWN rate and not something taken out of thin air.
 

joe351980

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There should have been a representative from a customer group to determine compensation. Their could be people who were due little or no compensation. The fact is that the banks came to this conclusion without any input from those affected.

How about having different levels of compensation A,B, and C then you could argue which bracket you came under. Anything other than just ticking a box for the banks.
 

Gordon Gekko

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As a general rule, I would say interest at 10% per annum plus compensation of 100% of the amount overcharged.

For the harder cases, where health issues have arisen, the appropriate big numbers. For example, €250k for someone who has had a stroke.
 

Brendan Burgess

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For the harder cases, where health issues have arisen, the appropriate big numbers. For example, €250k for someone who has had a stroke.
Gordon

How could you attribute the stroke to the overcharging? Sure people can claim every ill they have is due the overcharging, but usually there are multiple factors.

Brendan
 

Gordon Gekko

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Gordon

How could you attribute the stroke to the overcharging? Sure people can claim every ill they have is due the overcharging, but usually there are multiple factors.

Brendan
What about the man who appeared in front of the Finance Committee? He had a stroke and his wife had a nervous breakdown?
 

gnf_ireland

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Another poster suggested that the compensation should be at the banks own "unauthorised overdraft" surcharge rate on top of the interest.
For Ulster Bank this is 9
So an overcharge of 32k would probably mean a surcharge interest of about €7,000 based on a simplified 4,000 / year overcharge
Therefore a fair headline rate would be 20-25% of the overcharge.
The advantage of using the unauthorised overdraft rate is that you are using the bank's OWN rate and not something taken out of thin air.
I quite like the irony of this approach !!

Reminds me of the story regarding Cuba and the American businesses - they were asked to value then for tax purposes and the communists then offered them their own value to nationalise them ! Not that they accepted that of course !
 

gnf_ireland

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How could you attribute the stroke to the overcharging? Sure people can claim every ill they have is due the overcharging, but usually there are multiple factors.
What about the man who appeared in front of the Finance Committee? He had a stroke and his wife had a nervous breakdown?
This is a tricky one - no one doubts they had medical conditions, but how much was directly attributable to the overcharging? Was there underlying health issues that were undetected etc prior to the arrears starting? How much was related to losing a job for example, or other issues in the persons life *note I know nothing of the family above so it is just a general comment*
I think this one would be very difficult to handle as a generic rule and would need to go to an Appeals Panel
 

joe351980

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I think in general people just want what is fair. But to give everyone a generic amount is definitely not
 

gnf_ireland

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Let's be clear that the refund already includes interest.

Normally in cases such as this, only refunds are given. The Central Bank has got the lenders to agree to pay compensation to everyone.

It's very complicated which is why the Appeals Panels are the best way to decide.
Is it practical to have 20k plus cases through an Appeal Panel, plus all other parties who want to be included in the review?
 

gnf_ireland

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I think in general people just want what is fair. But to give everyone a generic amount is definitely not
Agree re fair

Why is a generic amount not fair? Maybe some had taken on less risk and not overstretched them as much, whereas others did. Maybe some are just better at handling stress/pressure etc. Does that make them any less a victim ?
 

Joey12

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Hi All
I believe that the compensation I was awarded in the initial redress from EBS is not fair.
The Bank decided on the compensation level and wrote the rules for the redress and Appeals process.
This means that the Appeals panel are bound by the terms of reference written by the bank.
The process keeps the customer at arms length from the Bank.
Why were the Bank allowed to offer such low levels of compensation for harm caused?
I think the problem with the redress and appeals process is that there is no independent oversight as the bank designed paid for and own the redress and appeals process.
The Appeals panel are following the Bank designed process.
The Appeals panel rejected my appeal for proper compensation and ignored other parts of my claim.
E.g. Breach of contract,
The EBS/AIB just hoped people would just go away if they got their own money back and a token compensation amount.
That's my reading of the situation.
I disagree with you Brendan it's not so complicated.
The bank need to meet its customers one to one and find out from them directly what harm they have inflicted on their own customers.
If the bank were selling a product they would have no problem arranging a meeting even "after hours"the Mortgage Masters.
I was denied a direct meeting with the Bank.
I offered to meet the appeals panel but they didn't see it as necessary as they rejected my Appeal outright.
 

peemac

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For some - (assuming KBC finally do the right thing) the tracker refund will almost be a bonus like a good savings account and now with option of deciding best place for the lump sum.

Certainly in my case I probably would have gone on more holidays, drunk better wine, boiught more clothes, went out to dinner more and possibly would have a small rainy day fund - now I'm looking at a decent rainy day fund. Far more spendthrift than I used to be, so will probably get more out of it than I would have over the past 8 years.

Not to say it hasn't been difficult, but I like to look on the bright side too! :)
 

gnf_ireland

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The bank need to meet its customers one to one and find out from them directly what harm they have inflicted on their own customers.
Ok so lets say they meet Joe Bloggs, and he has lost my tracker, lost my job (twice), had a health scare and crashed my car in the last 8 years. His wife has also left him, because she believes he had an affair. He suffers anxiety and rarely leaves the house any more.
Over 8 years, lots of things happen in someones life...

How does anyone realistically attribute what is as a result of the overcharging versus other factors?

A more realistic example is Jane Doe - she is a teacher and at the same time she lost the tracker she got hit with the pension levy and extra taxes.
She also lost her little side job as a kids music teacher as parents funds dried up.
Double whammy - less income/higher costs. How do you allocate the impacts on her life to each event - its not possible
 

joe351980

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Loss of earnings and extra pension are facts of life that you HAVE to deal with. The overcharging is something you shouldn't had to.
 

Joey12

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Hi GNF,
I see where you are coming from and I agree there are people who would try to take advantage of the situation.
But I still think the bank should meet its customers, why not?
It's a minimum curtousy the bank owe us.
If you agree.
The customers the-wronged party.
The Bank did a wrong to its customers.
The bank want the customer to prove that what the bank did caused harm to the customer.
Lodgic says to me that the bank did wrong and therefore the bank should have to prove they didn't cause harm claimed by the customers.
 

Stitcher

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I like the idea of using the banks unauthorised overdraft rate, per annum. What's sauce for the goose is sauce for the gander. That should be the generic level. Any excess suffering could be subject to a special case by case approach.
 

gnf_ireland

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It's a minimum curtousy the bank owe us.
Absolutely they owe you a personal apology and should make a reasonable attempt to do what they can to put it right

I just wont believe individual personalised settlements is practical within any sort of reasonable timeframe.

The bank want the customer to prove that what the bank did caused harm to the customer.
I think the difference here is a legal duty versus a moral duty and think you may be looking in the wrong place for moral duty.
 
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