# Is BoI calculating the refund of overcharged interest correctly?



## Stretchgoal (21 Dec 2017)

Hi

Am with BOI and have received redress letter confirming that they will pay back the money they wrongly took from me by overcharging me on interest for the last 9 years. They identify exactly what they will pay me, namely Redress, Compensation and €250 legal advice

Their definition of *redress* appears to be "*the amount you overpaid plus interest*"

The Central Bank's definition of Redress in their "*Principles of Redress*" document, are shown below, and certainly appear to be MORE than a simple "_amount you overpaid plus interest_".

search Google for "principles of redress central bank", and the PDF should be the 1st returned link. Appendix B of this document points out some very important statements concerning "REDRESS"

*1. Redress and Compensation *
1.1 Redress
1.1.1 _“*Adjusted Amount*”_ refers to the difference between the monthly amounts that customers were charged in respect of their impacted accounts and the monthly amounts that they should have been charged had the relevant issue identified not occurred.
1.1.2 *Loan balances are to be adjusted *(the principal balances on impacted customer accounts to be adjusted to the correct level as if the issue giving rise to redress had not occurred and appropriate Tracker Interest Rates had been applied to the accounts from the appropriate time).
1.1.3 Impacted customers are to have the option of receiving direct payments in respect of Adjusted Amounts as opposed to Adjusted Amounts being set off against the balance of their mortgage accounts (see below for when the account is in arrears). These repayments to take into account the time value of money.  
1.1.4 _*The adjustment of loan balances and the Adjusted Amounts to be calculated from the time that the relevant issue occurred.*_ This may be, for example, from the time that the impacted customer should have been able to avail of a Tracker Interest Rate, was erroneously moved from a Tracker Interest Rate or did not have material information brought to their attention by the lender, with the result that the customer made an uninformed decision that led to them losing an entitlement to a Tracker Interest Rate.
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My take from this is that (1) we should get all overpaid monies (plus any time value of money) and (2) the loan balances of the mortgages must be adjusted as per 1.1.2.

I see that plenty of people are talking a lot about waiting/receiving refunds of overpaid interest, but I don't see much discussion concerning 1.1.2/adjustment of loan balances, which appears to me to another significant point in this whole mortgage redress. 

Getting money back (however hard fought) is really the banks handing back what they wrongly took from us. I would think that getting the adjustment of loan balance is the punitive charge to the banks that they are also required to deliver on.

I have received my redress payment early this week, but I have not seen ANY communication from BoI about adjustment of loan balance, and from examining my online mortgage account, I don't see any change to the loan.


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## Wardy7 (21 Dec 2017)

PTSB adjusted loan balance.


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## Stretchgoal (21 Dec 2017)

BOI "compensation" appears set at 10% of Total Redress, calculated as follows

"How Much you Paid in Interest over the period" = A
"What your Interest payment should have been during the period" = B
"Total interest overpaid = (A-B)" = C
"Interest they will pay to reflect the time value of money" = D

*Total Redress = C + D*

*Compensation = 10% of "Total Redress" i.e. (C+D)*

They also offer either 250 or 1000 Euro towards legal fees, that some people seem to think relates to whether an account was in arrears (1000Euro) or not during the loan. 

They do no appear to make any reference to adjusting the loan principle balance.


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## Sadhbs (2 Jan 2018)

Hi Brendan. Do you think the loan balances should be adjusted according to the CB’s principles of redress as well as receiving a refund as Stretchgoal has said?


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## Stillwaiting (2 Jan 2018)

Stretchgoal said:


> Hi
> 
> Am with BOI and have received redress letter confirming that they will pay back the money they wrongly took from me by overcharging me on interest for the last 9 years. They identify exactly what they will pay me, namely Redress, Compensation and €250 legal advice
> 
> ...



I raised this issue before Christmas about the principle balance being reduced however BOI have *not *addressed it. They have completely ignored this component and just lumped all the interest together along with TVM & compensation and given us a couple of options.

The CBI guidelines clearly state as you have highlighted that the principle balance is to be reduced to what it should've been had this issue never arose. As mentioned in a previous post I will be appealing based on this clear fact.


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## LadyHB (2 Jan 2018)

How do you figure out what the principle balance should be reduced to had the issue never arisen? 

I'm trying to recreate the calculations BOI arrived at and run my own numbers. Given that BOI won't send me a data file to work off it's quite laborious as I made several changes to my account over the years (lump sum payments, monthly overpayments, term change and split the account). Does anyone have a nifty excel spreadsheet they're willing to share that would make things a little easier?


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## Brendan Burgess (2 Jan 2018)

(This thread illustrates why meaningful thread titles are important. I have edited the vague " Principles of Redress - Central Bank" to the current title which might alert more BoI customers to it.

Furthermore, given the complexity of the topic, I have deleted all the off-topic questions and comments ) 



This is very complicated.  I _think _that Bank of Ireland is calculating the redress correctly, but they are incorrectly refunding the full amount. They should be refunding less and reducing the mortgage by the balance.

*Let's start with how AIB did it *
Interest overcharged: €15,000

Applied as follows:
Cheque for overpayments: €10,000
Mortgage balance reduced: €5,000

*Bank of Ireland appears to be refunding the full amount of €15,000 by cheque. *
This is wrong but it's in the customer's favour.
*
Here is the exact wording of a BoI redress letter (*I presume that they are all the same?)

a) How much you paid:  €20,000
b) What your total repayment should have been if correct tracker rate had been applied: €12,000
_c) Total interest that you overpaid: €8,000 _
d) Interest we will pay you to reflect the time value of money: €400
e) Total redress: €8,400

But when you turn over the page to the calculations, you see
"Total difference in interest charged: €8,000"

There is a difference between interest charged and interest paid.  But they appear to be using the interest charged figure.

Brendan


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## Stillwaiting (2 Jan 2018)

LadyHB said:


> How do you figure out what the principle balance should be reduced to had the issue never arisen?
> 
> I'm trying to recreate the calculations BOI arrived at and run my own numbers. Given that BOI won't send me a data file to work off it's quite laborious as I made several changes to my account over the years (lump sum payments, monthly overpayments, term change and split the account). Does anyone have a nifty excel spreadsheet they're willing to share that would make things a little easier?



I think Brendan has something that may work(he explained it in detail in another thread) however I think if you want to appeal something like this you'll need to have an expert financial advisor involved.


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## Tigger-Tigger (27 Aug 2020)

Stillwaiting said:


> I raised this issue before Christmas about the principle balance being reduced however BOI have *not *addressed it. They have completely ignored this component and just lumped all the interest together along with TVM & compensation and given us a couple of options.
> 
> The CBI guidelines clearly state as you have highlighted that the principle balance is to be reduced to what it should've been had this issue never arose. As mentioned in a previous post I will be appealing based on this clear fact.




Hi Im wondering did BOI adjust the balance for you in the end OR did you have to go to the Ombudsman and with what outcome?


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## Tigger-Tigger (27 Aug 2020)

Brendan Burgess said:


> (This thread illustrates why meaningful thread titles are important. I have edited the vague " Principles of Redress - Central Bank" to the current title which might alert more BoI customers to it.
> 
> Furthermore, given the complexity of the topic, I have deleted all the off-topic questions and comments )
> 
> ...


Hi Brendan although "this is wrong" but in the customers do you think BOI should have been clearer that they were not adjusting the balance ?


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## TomTron (30 Aug 2020)

In case it is of help to other BOI customers:
This was raised with BOI in an Appeal - the attached is the response from the Bank SME to the Panel.
The Panel upheld this response from the Bank.


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## Tigger-Tigger (31 Aug 2020)

TomTron said:


> In case it is of help to other BOI customers:
> This was raised with BOI in an Appeal - the attached is the response from the Bank SME to the Panel.
> The Panel upheld this response from the Bank.


Thanks Tom Tom. Questions .....did BOI explain in their redress and compensation letter that they were not restoring the capital balance to where it should have been had the issue not occurred? Also, did BOI inform the impacted customer what the balance should have been had the issue not occured and finally did BOI inform the customer  that the payment of redress includes the capital too? I would think if the lender spelled it out clearly in its redres letter that the balance had not reduced and to warned them that they balance is now higher that that is fine but if they didnt explain it then how can customer make in informed decision with what to do with the redress monies


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## TomTron (31 Aug 2020)

I believe that is why the Bank provides some monies for the customer to obtain professional advices.

Customers can also bring an appeal, or lodge complaint with Ombudsman - I have personally seen one case where customer incurred over 20,000EUR in professional legal and accountant fees bringing an appeal and these were paid by BOI when the Appeal was upheld.


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