AIB Where is AIB getting the prevailing rates from?

kopkidda

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Moved from another thread to highlight this issue - Brendan

In the same boat, but interesting thing in my case is I appealed my case back in 2011/12 to FSO about getting a tracker rate and FSO found in my favour.

Bank offered me "pre-vailing rate" of circa 5.7% in 2011, which I naturally refused and stayed on SVR.

Now in this most recent letter other week they offer me the 3.32% and say that that was the prevailing rate back in 2011 when I came off my fixed.

So here they are telling me 2 different prevailing rates in 2011.

They are making this rate up as they go along.
 
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Brendan Burgess

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Bank offered me "pre-vailing rate" of circa 5.7% in 2011, which I naturally refused and stayed on SVR.

Now in this most recent letter other week they offer me the 3.32% and say that that was the prevailing rate back in 2011 when I came off my fixed.
Hi kop

This could be quite important if anyone takes a legal case.

I have always argued that they can't set the prevailing rate in retrospect. They must look at what the last rate was which was 1.25%.

The fact that you have been offered two rates shows how mad their process is.

Brendan
 

kopkidda

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Hi kop

This could be quite important if anyone takes a legal case.

I have always argued that they can't set the prevailing rate in retrospect. They must look at what the last rate was which was 1.25%.

The fact that you have been offered two rates shows how mad their process is.

Brendan
Ye strange that they have offered me 2 prevailing rates for the same time period.
 

Brendan Burgess

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Hi Kopkidda - So this is the summary of what happened - thanks for sending me the earlier letter from AIB

1) The fixed rate expired in September 2011
2) After he complained to the Ombudsman, The Ombudsman directed AIB to put him back at the margin prevailing back in September 2011.
3) AIB wrote to you as follows:
"I can confirm that the prevailing tracker rate is ECB (currently 0.75%) plus a margin of 5.15%"
4) Now they are saying that the margin would have been 3.32%

This makes no sense.

The prevailing margin in September 2011 should be x%. If there were some justification for setting it retrospectively, and I don't agree that there is any such justification, well they should arrive at the same margin for any particular date.

If someone else's tracker expired in September 2012, they might get a different prevailing rate.

What I am trying to say is that the prevailing rate should depend on the date the fixed rate expired and not on the date that AIB sets that rate retrospectively.

Brendan
 
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kopkidda

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Hi Brendan,

All correct except 3, AIB has said that the prevailing rate when my fixed was finished would of been 5.15% +.75%(ECB), which works out at 5.9%.
 

kopkidda

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the prevailing rate should depend on the date the fixed rate expired and not on the date that AIB sets that rate retrospectively.
Brendan
Not sure I agree on this. It should be the last prevailing tracker rate that was available prior to withdrawal of these products for "new customers" by AIB.
 

Brendan Burgess

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Hi kop

As you quote it, I don't agree with it either.

Don't forget my preamble..."If there were some justification for setting it retrospectively,and I don't agree that there is any such justification,"

I agree that it should be the last rate offered to new customers or the average rate on the tracker mortgage book.

Brendan
 

kopkidda

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Hi kop

As you quote it, I don't agree with it either.

Don't forget my preamble..."If there were some justification for setting it retrospectively,and I don't agree that there is any such justification,"

I agree that it should be the last rate offered to new customers or the average rate on the tracker mortgage book.

Brendan
Agreed Brendan, some people arguing it should be the rates available at drawdown, that's another argument.

Listened to Padraic Kissane on Tuesday and all saying in European Law in cases were there is ambiguity in contracts that all decisions should favour consumer, precedence has been set, we need Central Bank to get involved again to sort this 4000 cohort out, they cant be leaving it to the High Court.
 

Brendan Burgess

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some people arguing it should be the rates available at drawdown, that's another argument.
Not a bad argument.

The Central Bank cannot direct AIB or any other lender on how a contract should be interpreted. This will have to be done either by negotiation with AIB or by the High Court.

Brendan
 

IdesofMarch

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Hi Andy

Kop came out of his fixed rate in Sept 2011 when the ECB rate was indeed 1.5%.

But he got that letter after "winning" his complaint with the Ombudsman when the ECB rate had fallen to 0.75%

Brendan
But according to AIB's own brochure, the banks cost of funds for a borrower to be offered a prevailing tracker rate at this time was 12% for ppr and 13% for btl properties, amazing that! AIB state that they withdrew tracker products during these times because they were to expensive to cost and that no financial detriment occurred to their borrowers. Bless them; they were doing all this to protect their vulnerable customers.

As the Reverend Jim Jones said to his followers, swallow this medicine, it's good for you.
 
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Gigi07

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I got my letter from AIB a week ago. I fall under one of the 4,000 people who were denied the option of a tracker. They are being disingenuous by advising the average tracker rate for the period 2008-13 was 7.9%. The product was withdrawn on 10th Oct 2008. In cases where the contact terms are not clearly defined, the contract must favour the consumer. Therefore, the prevailing rate is the last rate offered for a tracker product prior to it being withdrawn ie 1.25%.
I intend to submit an appeal and also simultaneously a SARS request.
 

IdesofMarch

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I got my letter from AIB a week ago. I fall under one of the 4,000 people who were denied the option of a tracker. They are being disingenuous by advising the average tracker rate for the period 2008-13 was 7.9%. The product was withdrawn on 10th Oct 2008. In cases where the contact terms are not clearly defined, the contract must favour the consumer. Therefore, the prevailing rate is the last rate offered for a tracker product prior to it being withdrawn ie 1.25%.
I intend to submit an appeal and also simultaneously a SARS request.

Gigi07,

Well done, get a final response from the AIB and then off the Financial Ombudsman. I would advise all impacted borrowers to do the same. Like to see the Ombudsman's adjudication on the issue.
 

Gigi07

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Thanks IdesofMarch and as an ex-Bank employee I would echo you advise to urge all impacted borrowers to appeal and submit a SARS request. Good way of getting their attention - he who shouts loudest etc, I'm also contacting my local TDs.
 

Andy836

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AIB's cost of funds in 2010 was 1.9%, in 2008 was 1.8%.

The argument that a tracker rate would have had to be 12% is total rubbish.

If that was the case they would have had to raise the SVR to that level too. They're is no separation of funding between the products, they don't match trackers with one liability class, nor do they match SVR's with some other liability bucket.

They cite some mortgage pricing model but don't give the details or assumptions used. It is ripe for dispute.
 

Gigi07

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Andy836
Can I ask where are you getting AIB COF from please? I would like to check it for Nov 11 when my fixed rate expired - could be useful in my appeal. Thanks
 

Sleven273

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I think AIB s costs of funding are detailed in their published set of accounts each year. Each set of accounts is about 300 pages long. As AIB is a PLC accounts should be available on request for all t he years or you should be able to get them on the internet.
 
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