What type of properties are included in the redress scheme?

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Sarenco

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No, I didn't. Once again, I never said that commercial mortgages were not in scope.

For the second time, I would respectfully ask you to lay off the invective.
 

RedOnion

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Getting back to the original question, as entertaining as this thread is.

It's a big jump to go from an example of a customer receiving redress, to saying all commercial loans are in scope.

The initial scope of examination related to mortgages. The letter of 22nd Dec 2015 was only sent to those 15 lenders who had issued PDH or BTL mortgages, and the letter spoke of PDH and BTL only, and is what the initial 2m accounts is based on. The normal meaning of buy-to-let mortgage as used by CBI relates to residential investment property. They did not issue the letter to lenders who had issued commercial loans by way of a mortgage charge on non residential property.

CBI have clarified that commercial loans (whether mortgage or not) are in scope where the loan is secured against a home. That brings a lot of small business loans into scope. It may also bring cross-collateralised into scope.

Some lenders, as part of their tracker review, have identified issues within their wider commercial and personal loan books. These were not in the initial examination scope, and are not included in the CBI impacted numbers. UB is an example where they have announced that they have made a financial provision for such issues, but that number is reported separate to their tracker redress number.
 

IdesofMarch

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I'm not disputing the factual position – I really couldn't have any clearer on that point.

If I take out a loan to purchase a premises from which I intend to operate my business that is clearly not a BTL (buy to let) loan. I'm not buying the property with a view to letting it to anybody.

Yes you did!
 

Sarenco

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CBI have clarified that commercial loans (whether mortgage or not) are in scope where the loan is secured against a home
So the answer to Dan's original question is that loans secured on non-residential property are out of scope. Right?
 

RedOnion

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So the answer to Dan's original question is that loans secured on non-residential property are out of scope. Right?
That is my understanding. Unless CBI have changed their mind since the letter dated 22 Dec 2015.
 

IdesofMarch

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No, I didn't. I really couldn't have been clearer on that point -
Look at the example that I quoted in my last post above (post 124). Yes you did! It was an inane example of how not to purchase tax efficient commercial property. The obvious thing to do to reduce your liabilities, would be for you to rent your recently purchased commercial premises (with the commercial mortgage) to your business.
 

Sarenco

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Yes you did
No Ides, I didn't. However, I would like to thank you for the unsolicited tax advice - very helpful I must say.;)

So, after all that we still seem to have contradictory views as to whether loans secured on non-residential property are in scope. Hopefully Dan will clarify the matter with the Central Bank and report back to us.
 

IdesofMarch

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No Ides, I didn't. However, I would like to thank you for the unsolicited tax advice - very helpful I must say.;)

So, after all that we still seem to have contradictory views as to whether loans secured on non-residential property are in scope. Hopefully Dan will clarify the matter with the Central Bank and report back to us.
Your more than welcome, looks like you need it if you intend to dip your beak into any commercial property venture. Ha!
 

IdesofMarch

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CBI have clarified that commercial loans (whether mortgage or not) are in scope where the loan is secured against a home. That brings a lot of small business loans into scope. It may also bring cross-collateralised into scope.
Red Onion,

Cross collateralisation on commercial properties is a big issue that will bring most if not all commercial non residential loans into the CBI scope, as banks, particularly Ulster bank, tended to increase their security on these types of mortgages after 2009, in return for a favourable annual review.
 

RedOnion

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Yes, the cross collateralised loans pose a particular complexity. However my understanding, and this is from a very early stage in the review, is that one of the secured assets had to be a residential property to be in scope.
Of course issues identified outside of the scope should also be addressed by the lenders.
 
D

Dan Murray

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Thanks Red

When it comes to this stuff - you knows your onions!

Fair play....
 

Sarenco

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FWIW, I was chatting earlier today with a contact in one of the major audit firms that is heavily involved with the Central Bank's tracker investigation process.

She was adamant that only loans that are secured on residential properties are within scope.

I appreciate that flatly contradicts what Ides is saying but there it is.
 
D

Dan Murray

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I appreciate that flatly contradicts what Ides is saying but there it is.
Hi Sarenco,

It also contradicts what Jim Stafford is saying?

It's extraordinary that there is still such confusion. It's also extraordinary if non-residential properties are excluded - as in, why would the Central Bank not wish to protect the Consumer - all Consumers (as per their definition)?

In advance of writing to the Central Bank, I've been doing a bit of research. When I complimented RedOnion earlier, it was out of gratitude for providing the link to the Finance Committee link which I was in the middle of reading. My understanding of this is that the Governor said that commercial mortgages should be included!! The caveat is that he did not use those precise words but that certainly was my understanding of what he was saying.

Curious and curiouser.

Sorry a bit rushed - need to head out....
 

Webster

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Hi Sarenco,

It also contradicts what Jim Stafford is saying?

It's extraordinary that there is still such confusion. It's also extraordinary if non-residential properties are excluded - as in, why would the Central Bank not wish to protect the Consumer - all Consumers (as per their definition)?

In advance of writing to the Central Bank, I've been doing a bit of research. When I complimented RedOnion earlier, it was out of gratitude for providing the link to the Finance Committee link which I was in the middle of reading. My understanding of this is that the Governor said that commercial mortgages should be included!! The caveat is that he did not use those precise words but that certainly was my understanding of what he was saying.

Curious and curiouser.

Sorry a bit rushed - need to head out....
Dan,

I contacted my bank and told them about my commercial mortgage. The staff member asked what rate I was tracking I said x% over Euribor. They passed me over to a supervisor who said that I am within scope for tracker examination. They said I could write or email. I will be sending a registered letter to them as I have heard of horror stories of correspondence going missing (yes, including emails)
 

IdesofMarch

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I think most if not all commercial mortgages are in scope, why wouldn’t they be. If a bank is ripping off an individual, it shouldn’t make a difference what category of customer they are. I believe the review by the CBI is all about whether you were denied a tracker rate or put on the wrong one. Most FI's included the dreaded all sums charge, or cross collateralisation of the loan, linking a commercial mortgage to any other mortgages that the borrower has or will have in the future.
 
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