Compensatory Interest

Refunded

Registered User
Messages
2
Hi, I am going to leave this quite vague to prevent identification of me or anyone else involved.

I have raised a complaint against an Irish bank and after an investigation by them, they have come back with an offer to resolve it, which essentially retrospectively reprices a loan product, which will result in a refund of some interest paid by me.

In their communications, they state that they do not admit that they failed to honour contractual obligations, but that they acknowledge an administration error so are providing a goodwill gesture.

I am living in the UK and believe that where such refunds are made here, the norm is to make an additional 8% per annum compensatory interest payment. So if a refund is made to someone in December 2016 for an overcharge of £100 in July 2014, it would be 100 * ((0.08 / 12) * 6) for 2014, then two lots of 100 * 0.08 for 2015 and 2016, so £20 in total, and to complicate matters, 20% income tax must be paid from that so the final payment to the consumer would be £16.

The rationale for this is that if you had access to the funds, you would not have had to borrow and therefore the rates are much higher than those available on deposit at the time. All the PPI refunds etc include this interest payment.

So my question, if anyone can answer it, is firstly whether such an agreed rate, or principle, exists in Ireland.

Secondly, as this is a goodwill gesture, should I request that this be paid or should I just be thankful for what I have got?
 
Hi Refunded,

You make a very good point but I don't think there is anything more available than 8% pa. Maybe Padraic Kissane might know?

I appreciate you want to avoid identification but were you returned to a tracker rate by any chance as your post might provide an insight into the central bank tracker examination currently underway.
 
If I could get the 8% p.a., I would be happy. It is just that I have never seen it referred to in any Irish context. I feel that this interest should never have been charged, and therefore some level of compensation interest must be paid as I did not have access to the funds to do what I wanted with. But if it is a goodwill gesture, then they can tell me to take it or leave it, that the refund does not refer to anything specific, and they can give me whatever they like.
 
Perfect. Basically P Kissane should be able to help especially if it is 'tracker examination' related - hope this helps
 
Back
Top