# What is reasonable compensation for those affected by the tracker issue



## gnf_ireland (27 Oct 2017)

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


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## Brendan Burgess (27 Oct 2017)

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.


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## odyssey06 (27 Oct 2017)

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.


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## peemac (27 Oct 2017)

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.


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## joe351980 (27 Oct 2017)

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.


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## Gordon Gekko (27 Oct 2017)

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.


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## Brendan Burgess (27 Oct 2017)

Gordon Gekko said:


> 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


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## Gordon Gekko (27 Oct 2017)

Brendan Burgess said:


> 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?


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## gnf_ireland (27 Oct 2017)

peemac said:


> 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 !


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## gnf_ireland (27 Oct 2017)

Brendan Burgess said:


> 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.





Gordon Gekko said:


> 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


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## joe351980 (27 Oct 2017)

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


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## gnf_ireland (27 Oct 2017)

Brendan Burgess said:


> 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?


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## gnf_ireland (27 Oct 2017)

joe351980 said:


> 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 ?


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## Joey12 (27 Oct 2017)

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.


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## peemac (27 Oct 2017)

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!


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## gnf_ireland (27 Oct 2017)

Joey12 said:


> 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


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## joe351980 (27 Oct 2017)

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.


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## Joey12 (27 Oct 2017)

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.


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## Stitcher (27 Oct 2017)

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.


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## gnf_ireland (27 Oct 2017)

Joey12 said:


> 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.



Joey12 said:


> 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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## Gordon Gekko (27 Oct 2017)

I think that in a court of law, it would be agreed that someone with no history of medical issues prior to the stress of a tracker debacle who then had a stroke could reasonably contend that the two are linked.

Then we’re into hundreds of thousands and rightly so.

For the generic cases, look to Revenue and their penalties regime for guidance;

Money back
100% penalty
8% per annum interest


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## notabene (27 Oct 2017)

In the above situation @Brendan Burgess describes re trading up - and have documentation of looking to move before I applied to FSO to get tracker back and at the time I would have been able to keep my apartment to rent and buy a house locally with a very reasonable mortgage. However, I was not happy with the tracker being gone and Ulster had started letting people move with their trackers fully intact.

I was cognoscent of the clause in the contract which states you must be resident in the property to avail of the tracker and waited to move until the FSO process was finished. I was advised by the FSO it would take 5 months, it took 26. By the time it concluded the differential in house prices had risen too much and it would have been necessary to sell the apartment but apartment prices had not recovered in the same way and the differential was too much. I am also 5 years older now than I would have been and this also impacts on borrowing capacity as well as potential repayments

As the subsequent emails emerged stating the section 2 of my contract provision - I would definitely be looking for compensation for an inability to trade up, particularly as the bank pursed the case so vigorously through the FSO knowing that I should have had it back initially.

Moreover, over the period since have made no reasonable effort to correct the situation. As recently as March I was trying to move again and the bank would not budge on sorting it out.  In this scenario, though the apartment price has risen, the differential is too great as houses are selling for generally 20% more than their asking price - apartments not so much and I couldn't get into a bidding war with a couple. Also estate agents would not look at you without being sale agreed yourself so there was a large risk of ending up with nothing

A friend was telling me recently there is a statute called loss of chance where you can look for such damages so with that particular evidence I think I would be pushing for that sort of compensation. As things currently stand, I would have been better off financially not to have gone to the FSO and moved without the tracker.

I would also argue that I have put in uncountable hours in terms of sorting it out - that could have been used to put towards a business I do in addition to my day job, I could have used the two nights working towards my social life, family and all other activities - I completely understand the point Brendan is making regarding you can't say everything is the fault of the tracker but the unresolved situation has a huge knock on affect on the choices which you are able to make or have to make as well as the general weight of the stress of it in your daily life -and that part is very difficult to quantify as things might have happened which you can't say are fully the result of this but they most certainly were a contributory factor. I may have ended up on 6 hours a week in work with unpaid holidays numerous years as did happen a result of the public service moratorium anyway but that would have been easier to get through with the tracker on the mortgage.

I think at a minimum - they should look at what you would pay them were you in arrears to them for ten years and give a similar sum of compensation


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## joe351980 (27 Oct 2017)

I think at a minimum - they should look at what you would pay them were you in arrears to them for ten years and give a similar sum of compensation[/QUOTE]

What would a bank charge?

 This would be a good starting point as it comes from the banks own scale.

This however would not account for the personal trauma.


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## Stitcher (27 Oct 2017)

I definitely agree that many young people and families were severely impacted by losing their tracker mortgages and having increased repayments. Banks should compensate accordingly. I have no doubt that many will have evidence like notabene and banks will have to address that.


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## BlueSky (28 Oct 2017)

Brendan Burgess said:


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



Can I check I'm understanding what you're saying, Brendan?  That the banks have committed to paying back, and are already in the process of paying back:
1. the sum overpaid
2. Interest on the sum
3. Compensation.

I believe that there's a big lack of clarity on the Interest which is due to us, and compensation which is discretionary.


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## Stitcher (28 Oct 2017)

I agree. 

WHAT rate of interest is being included? "Prevailing" deposit interest rate or unarranged overdraft interest rate? It should be the latter!!

And although interest is included in the sum, compensation could be calculated as an additional % charge, for every year


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## SaySomething (28 Oct 2017)

They're paying 'time value of money'. It's not a compound calculation.


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## joe351980 (28 Oct 2017)

What is the time value of money


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## Clamball (28 Oct 2017)

Gordon Gekko said:


> I think that in a court of law, it would be agreed that someone with no history of medical issues prior to the stress of a tracker debacle who then had a stroke could reasonably contend that the two are linked.
> 
> Then we’re into hundreds of thousands and rightly so.
> 
> ...



I really like this idea.  Revenue apply these penalties to discourage people attempting to evade their taxes and to penalise them for the amount of time Revenue was without the money it was owed.  So this penalises the bank and ensures the customer gets their own money back and gets amply compensated for the losses in their lives the lack of money caused in the years since the tracker was taken from them.   

I would also suggest for every phone call made by the customer to the bank €50, for every letter written to the bank €100, for every holding letter the bank wrote to the customer €100, for every meeting with the bank €500 for an application to FSO another larger penalty to the bank.   So the longer the bank dragged the compensation on and on, for the more lack of response to letters or calls the greater the penalty.  

There are some posters here, who never even realised they had suffered a damage until the bank contacted them, there are others who have been writing and calling to the bank for years and years.  This option would allow the customers who have been affected the greatest by the lack of engagement of the banks the most compensation.

For those who lost their houses:  That is another entirely different level of compensation.  If it was me, I would probably like my actual house back in my ownership, and all my mortgage payments sorted out and up to date by the bank, as a start...


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## notabene (28 Oct 2017)

@joe351980 time value of money means the account for the value of the money that you would have had. If you have a fiver in 2006 and a fiver in 2017 - their actual value, as in their purchasing power is not the same. So when there is time value of money calculated this accounts of the loss of value in the money today compared with what you would have had in previous years


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## joe351980 (28 Oct 2017)

Thanks, what percentage is that?


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## Stitcher (28 Oct 2017)

Sounds like it's not much more than the rate of inflation!


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## notabene (28 Oct 2017)

@Stitcher not really -that is what it is, accounting for inflation


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## Pensch (28 Oct 2017)

In some _American _jurisdictions, the lender on a usurious loan is subject to the following civil penalties: 
(1) forfeiture to the borrower of *all interest* on the loan, e.g. (EUR20K*10years=EUR200K), not just the usurious part; *and 
(2) payment to the borrower of triple the amount of interest collected* before the mortgagers bring suit. (EUR200K*3=EUR600K)


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