# Central Bank publishes comprehensive - ish update on tracker review



## Brendan Burgess (23 Mar 2017)

The Central Bank has just published its review

*Central Bank publishes update report on continuing Examination of Tracker Mortgage Issues  *



Key points:

Useful examples given of cases where trackers had to be given back, but these were all known anyway.

No comments on the major outstanding issue - AIB's decision to set the prevailing rate retrospectively at 3.25% and thus deeming those customers unaffected.

No requirement on lenders to inform borrowers who have not been affected.


----------



## Brendan Burgess (23 Mar 2017)

Central Bank press statement Brendan's comments in red 

*Central Bank publishes update report on continuing Examination of Tracker Mortgage Issues*

§  Report sets out progress being made by lenders in completing review. Details on Examination Framework, Principles for Redress and the Appeals Process published.

§  At end February, 9,900 impacted customer accounts identified by lenders. Of this, approximately €78m has been paid out in redress and compensation to approximately 2,600 accounts to date. Average redress and compensation: €30,000

§  Lenders are expected to identify all impacted accounts by end September 2017.

§  Enforcement activity set out – one investigation has concluded with two others ongoing. Springboard concluded. permanent tsb and Ulster Bank ongoing, I assume.  No other bank  being investigated. 

The Central Bank of Ireland has published a report providing a further update on the Examination of Tracker Mortgage Related Issues. The report is the latest in a series of status updates since the Examination commenced and sets out the progress being made by lenders in completing the review. As at end February 2017 lenders’ reviews had identified approximately 9,900 impacted customer accounts. The report also sets out information on the Central Bank’s enforcement powers and activity in response to the tracker mortgage issues identified to date. The Examination Framework, the Principles for Redress and the Appeals Process set out by the Central Bank have also been published, in conjunction with the report. Are these the bits in the report, or are there separate documents? 

The immediate focus of the Examination is to ensure that the interests of impacted customers are protected and that lenders prioritise the identification of impacted customers. Under the Principles for Redress lenders must stop further harm to impacted customers at the earliest possible time and must put in place a redress and compensation programme to fully address the impact their actions have had on impacted customers. The Principles for Redress also set out the Central Bank’s expectations for lenders to provide, amongst other things, additional payments to allow impacted customers to seek independent professional advice.  Some lenders have already commenced redress and compensation payments. At the end of February approximately €78m had been paid out in redress and compensation to approximately 2,600 accounts identified as part of the Examination.

The Tracker Examination is a priority for the Central Bank and it has set specific timelines for lenders to complete Phase 2 of the Examination which identifies impacted customers, the last of which will be completed no later than end September 2017.

The Central Bank will take appropriate supervisory action, up to and including enforcement action where necessary, in order to ensure lenders deliver fair outcomes for impacted customers. Enforcement activity will be influenced by the outcome of the reviews currently being conducted as part of the Examination.

In line with the process to date, the Central Bank will continue to provide updates throughout the Examination. A further update will be published by the Central Bank in Autumn 2017 and a final report will also be published after the conclusion of the Examination.


----------



## Brendan Burgess (23 Mar 2017)

*Questions for the Central Bank which those affected want to know
*
When the lenders identify cohorts which were not affected - did you approve those decisions?   (For example AIB has a lot of customers who were entitled to trackers at the then prevailing rate when their fixed rates expired.  AIB did not offer them rates. But now argue that if they had offered them trackers, they would have been at a rate higher than the SVR, so they were not affected.) 

"Enforcement activity set out – one investigation has concluded with two others ongoing." The Central Bank investigation into ptsb began some time before July 205. How come it's taking so long? 

"As at December 2016, 9 lenders have submitted Phase 2  reports."
Which lenders have completed Phase 2 reports? Does this mean that they have identified and contacted all those affected?


----------



## Brendan Burgess (23 Mar 2017)

The numbers are interesting Appendix I PdF page 23


----------



## Brendan Burgess (23 Mar 2017)

Principles for Redress published

customers.  To achieve this aim, the Central Bank has developed and issued to lenders a set of Principles for Redress (being published in tandem with this report) which clearly set out its expectations of lenders in this area, as follows:

_It's not clear to me if there is a separate document or if it's the following:_


*1. Stopping further harm to impacted customers*
 As soon as groups of impacted customers are identified, any harm potentially being caused to them must be stopped at the earliest possible time;

 This includes ceasing charging impacted customers the incorrect interest rate and applying the appropriate tracker interest rate (or, where this cannot be determined, applying an interim reduced interest rate); and

 Lenders are required to submit detailed information in relation to the controls they have put in place to ensure no further loss of ownership events occur or litigation is progressed in respect of potentially impacted customers. The Central Bank has and continues to challenge lenders in respect of the adequacy of these controls.

*2. Redress and compensation to impacted customers*
 All redress and compensation programmes must at least return impacted customers to the position they would have been in had the relevant issue not occurred;

 Redress and compensation is to be paid to customers up front at the point of offer;

 Redress and compensation offers cannot be reduced by virtue of a customer lodging an appeal;

 Compensation must be reasonable and reflect the level of detriment suffered;

 Redress and compensation programmes must be fair, clear, provided in a timely
manner and be easily accessible for impacted customers;

 Where impacted customers are identified, lenders must develop a specific redress and compensation programme to address the impact on those customers and submit it to the Central Bank for re view prior to implementation. The Central Bank has and will continue to challenge lenders in respect of the development of these programmes to ensure that they are as customer-friendly as possible; and

 Lenders must have appropriate governance and clear lines of responsibility around their redress and compensation programmes and such programmes must be overseen at board level.


----------



## Brendan Burgess (23 Mar 2017)

Does the 9,900 people affected include the 3,916 BoI cases which were on trackers, but which were being overcharged by 0.15%? I presume not, as they were on trackers. 

[broken link removed]


----------



## Sarenco (23 Mar 2017)

Brendan Burgess said:


> Does the 9,900 people affected include the 3,916 BoI cases which were on trackers, but which were being overcharged by 0.15%? I presume not, as they were on trackers.



I think it does Brendan - footnote 8 on page 27 relates to the 9,900 figure:-

"Approximately *60% *of impacted accounts arise as a result of customers not receiving a tracker product and approximately *40% *of impacted accounts arise from customers not receiving the correct tracker margin."


----------



## Sarenco (23 Mar 2017)

Brendan Burgess said:


> "As at December 2016, 9 lenders have submitted Phase 2 reports."
> Which lenders have completed Phase 2 reports? Does this mean that they have identified and contacted all those affected?



"Lenders have commenced contacting impacted customers identified as at end February 2017, and have rectified the interest rates applied to such impacted customers’ accounts, thus stopping further detriment, on *over 90% of identified impacted accounts* requiring rate rectification as at the date of this Report.

The Central Bank is in the process of reviewing Phase 2 reports that have been submitted by lenders. The Central Bank has and will continue to challenge lenders with regard to the content of their Phase 2 reports and their activities related to the Examination. Lenders will not be considered to have completed their reviews until the Central Bank has completed its review and assurance work."

The Central Bank obviously feel constrained by their statutory confidentiality obligations from naming the laggards who have yet to submit their final Phase 2 reports.


----------



## Brendan Burgess (23 Mar 2017)

Sarenco said:


> I think it does Brendan - footnote 8 on page 27 relates to the 9,900 figure:-
> 
> "Approximately *60% *of impacted accounts arise as a result of customers not receiving a tracker product and approximately *40% *of impacted accounts arise from customers not receiving the correct tracker margin."



Well spotted. Thanks for that.

So it's really only 6,000 seriously affected. 

Brendan


----------



## Brendan Burgess (23 Mar 2017)

The CB has just added three new documents to the website: 

[broken link removed]Framework for Conducting the Tracker Mortgage Examination 

[broken link removed]Principles for Lenders when Tracker Mortgage Related Issues Identified for Redress (Principles for Redress)

[broken link removed]Guidelines for the Establishment and Operation of an Appeals Process to deal with Appeals Arising from the Tracker Mortgage Examination


----------



## Sarenco (23 Mar 2017)

Interesting that the final Phase 2 reports were originally supposed to be submitted to the Central Bank by end-September 2016 and this deadline has now been pushed back by a full year to end-September 2017.

Why?

The majority of lenders have already completed and submitted their Phase 2 reports so why are the laggards being given such a generous time extension? 

The Central Bank has been receiving monthly updates from all lenders so it's not like this issue crept up on the Central Bank.  Has the Central Bank called in the senior executives of the laggards to explain this unacceptable ongoing delay to bring this process to a conclusion?


----------



## Freshstart (23 Mar 2017)

"Compensation must be reasonable and reflect the level of detriment suffered" seriously!? Well in that case be there be further sanctions against PTSB for their miserable failure at this.


----------



## SirMille (24 Mar 2017)

Brendan Burgess said:


> Principles for Redress published
> 
> *2. Redress and compensation to impacted customers*
>  Redress and compensation offers cannot be reduced by virtue of a customer lodging an appeal;



That green lights an immediate appeal.


----------



## Onceagain (24 Mar 2017)

It's a document that says everything and nothing all at once, can anyone read between the lines.


----------



## SirMille (24 Mar 2017)

If I squint while reading it, I can see lots of vague weasel words that tells me they will try to nickel and dime us, without an ounce of remorse.

For example, with one reading, several people noticed that the sums involved is not compensation but actually repayment of money owed. Let me ask you all this, how many hands did this phrasing pass through, and none of them questioned this.

Maybe not, who can really tell.


----------



## SaySomething (24 Mar 2017)

Hard hitting op-ed in the Irish Times today on this topic. http://www.irishtimes.com/business/...-correct-tracker-rates-to-customers-1.3022597


----------



## corktim (24 Mar 2017)

This whole process is a farce!


----------



## peemac (24 Mar 2017)

corktim said:


> This whole process is a farce!


I'd disagree 100% - without the central bank review, the various banks would have got away scot free.


----------



## corktim (24 Mar 2017)

I didn't mean the review itself just the manner in which it is being conducted.


----------



## Onceagain (24 Mar 2017)

It's the time it's taken and the lack of transparency, it's difficult sitting on the side line looking out, and unable to do anything.  Hopefully they get what is an extremely difficult job done, asap. I don't envy it, it's the banks that caused this, lets be clear.


----------



## Bronte (25 Mar 2017)

Brendan Burgess said:


> *Questions for the Central Bank which those affected want to know
> *
> When the lenders identify cohorts which were not affected - did you approve those decisions?   (For example AIB has a lot of customers who were entitled to trackers at the then prevailing rate when their fixed rates expired.  AIB did not offer them rates. But now argue that if they had offered them trackers, they would have been at a rate higher than the SVR, so they were not affected.)



How did AIB decide on a tracker rate higher than the SVR?

Does the CB Accept that reasoning.

I don't understand you using the word 'retrospectively' ? Does that mean they deliberately plucked a rate in the present to say this is the rate which would have applied at the time?

Is that rate similar to prevailing rates in Bank of I and PTSB.


----------



## Bronte (25 Mar 2017)

corktim said:


> I didn't mean the review itself just the manner in which it is being conducted.


Could you expand on your thinking?


----------



## Bronte (25 Mar 2017)

Brendan Burgess said:


> The CB has just added three new documents to the website:


I see the boys in the CB Are still reading AAM!

Is there a division in the figures to see the difference between overpayment refunded and compensation?

How much can a customer get in order to pay for independent kegsl advice? That kind of thing does not come cheap.


----------



## Brendan Burgess (25 Mar 2017)

Bronte said:


> I don't understand you using the word 'retrospectively' ? Does that mean they deliberately plucked a rate in the present to say this is the rate which would have applied at the time?
> 
> Is that rate similar to prevailing rates in Bank of I and PTSB.



Bank of Ireland is not affected by this issue. They did not issue mortgage contracts which did not specify the margin.

permanent tsb and AIB issued fixed rate contracts which said "when the fix is over you will be entitled to a tracker at the then prevailing rate"

Although ptsb were no longer issuing trackers to new customers, they offered those borrowers whose fixed rates expired tracker rates of 3.25%. 

AIB did not give the borrowers the tracker option, as they were no longer doing trackers. Now, years later, AIB is saying "We should have offered you a tracker. But if we had done so, it would have been at 3.67%". 

So ptsb set their prevailing rate at the time. AIB set it retrospectively.

I personally think it's very hard to challenge ptsb on this issue, although Padraic Kissane and others take a different view. It's discussed at length in the thread on the issue.  However, those who broke out of their fixed terms early, have a great case for getting the lower rate prevailing at the date they broke out of their contract. ptsb is putting them on the rate prevailing when their contract was due to end.

In my view, the AIB case is not defensible by AIB. By definition, you cannot set a prevailing rate 4 years later.  They should take the last rate on offer to new customers. 

The Central Bank has not commented on it but has approved the refund schemes of AIB, so it is presumably, approving it by its silence. 


Brendan


----------



## Bronte (25 Mar 2017)

Surely the CB should be questioning AIB on this magical rate they picked.


----------



## Wardy7 (25 Mar 2017)

Brendan Burgess said:


> Although ptsb were no longer issuing trackers to new customers, they offered those borrowers whose fixed rates expired tracker rates of 3.25%.



But they didn't Brendan?? I'm confused, purely because I know that you know what your talking about. 

They didn't offer any tracker rate.....obviously until July 2015?


----------



## Brendan Burgess (25 Mar 2017)

Hi Wardy 

That is the essential difference between AIB and ptsb which I think that those affected by ptsb seem to miss.

Most people who had these contracts, did not break out of them early. They went to the end of term and then ptsb offered them a tracker at the then prevailing rate. 

So, ptsb actually had a prevailing rate. You might not like the rate. But they had one at the time. 

AIB did not have a prevailing rate, so they set it retrospectively.

Brendan


----------



## Somar (25 Mar 2017)

Brendan

I was offered a tracker rate of 2.35% on top of ECB rate by PTSB in March 09 after expiry of 2 year fixed rate.
The rate was then higher than the other rates on offer by PTSB.
No mention of this rate or a prevailing rate in original contract.
Are PTSB entitled to set these rates and if so how do they calculate them as it would appear to me they were cleverly calculated to induce customers off trackers?


----------



## Wardy7 (25 Mar 2017)

Oh right. I see what you mean now. I broke early so I was never offered the tracker.

Thanks for clarification! (I knew there had to be an explanation!!)


----------



## Milo4444 (25 Mar 2017)

Brendan 

Did FA have a prevailing rate in March 2009 or should it revert to original home loan tracker rate?


----------



## delsalmon (25 Mar 2017)

Ptsb. Approved mortgage April 07.
December 07 moved in and drew down.
April 09 broke out of fixed rate which would have expired December 09.
I'm on 3.25% + ECB.
If by reading above comments I may have a chance of fighting the rate.
Does this mean I should be on the tracker rate of April 09?
And if so what is the rate for April 09?


----------



## Brendan Burgess (29 Mar 2017)

Somar said:


> Are PTSB entitled to set these rates and if so how do they calculate them as it would appear to me they were cleverly calculated to induce customers off trackers?



Hi Somar

Variable mortgage contracts allow the lenders to set the mortgage rates.

A lender who offers tracker mortgages is entitled to set the tracker margin at whatever rate it likes for new customers.

ptsb will argue that it  was entitled to set the margin for customers whose fixed rate expired at any level it liked.

I have not yet seen a well documented counter argument to that.  There may be one, but I just haven't seen it.  There is talk of a legal case on the issue. Before a legal case is taken,  a very coherent argument will have to be developed. I would love to see such an argument. 

Brendan


----------



## Brendan Burgess (29 Mar 2017)

Milo4444 said:


> Brendan
> 
> Did FA have a prevailing rate in March 2009 or should it revert to original home loan tracker rate?



That is a completely separate issue. As far as I know, FA's contracts specified the tracker rates.  If you have a question on this, start a new thread and give the full details.

Brendan


----------



## Brendan Burgess (29 Mar 2017)

delsalmon said:


> Does this mean I should be on the tracker rate of April 09?



ptsb have put all these borrowers on the rate at the time the tracker was due to expire. 

However, I think that a court would rule that this is the wrong rate and would give you the rate when you broke out early. 

The rate in April 2009 was 2.25%

http://www.askaboutmoney.com/threads/what-do-do-if-your-tracker-rate-is-ecb-2-25-or-ecb-3-25.195425/

I think that this is a much stronger case than the general "the tracker rate is too high" case.

Brendan


----------



## Wardy7 (29 Mar 2017)

Brendan do you know what the PTSB rate was in January 2009?


----------



## Somar (29 Mar 2017)

Hi Brendan

Thanks for your response on the "manufactured" rate issue.
When is this legal case you referenced on this issue due before the courts??
If the rate in April 2009 was 2.25% and increasing to over 3% later that Summer before PTSB stopped offering trackers then how could my rate in March 09 possibly be 2.35%?

PTSB used these "manufactured" rates to keep their tracker rate slightly higher than their SVR so as to induce customers off their trackers. Of this I am convinced but proving it will be a huge challenge. When ECB starting dropping ECB rates big time, PTSB and others stopped offering trackers of course!!!

I would also like to know the PTSB margin rate above the ECB for Jan and Feb 2009??

Are the rates different for each customer, surely not, how are they calculated??


----------



## Brendan Burgess (29 Mar 2017)

Somar said:


> If the rate in April 2009 was 2.25% and increasing to over 3% later that Summer before PTSB stopped offering trackers then how could my rate in March 09 possibly be 2.35%?



Was yours a buy to let property? I quoted the rates for home loans. I think that buy to let were 0.1% higher. 



Somar said:


> When is this legal case you referenced on this issue due before the courts??



I don't know. I gather that some borrowers have issued legal proceedings, but I don't know if it's gone any further than that. I don't know if it will either. I am not involved. 



Somar said:


> Are the rates different for each customer, surely not, how are they calculated??



The rates are not calculated as such. They are at the discretion of the lender unless the margin is specified in the mortgage contract. 

Brendan


----------



## Stitcher (30 Mar 2017)

I was offered ecb + 2.25 by ptsb  in Jan 2009 as follow on to my "discounted tracker" which i thought should have reverted to ecb + 0.8% after the discount period (0.6% for 1 year). Their special clause 9 mentioned moving to the " then current tracker rate" which was confusing and misleading and not fully explained. The offered 2.25 % tracker was higher than all other rates so i took the cheaper variable under duress. Case with CB at the moment. Am told i may have a response by June (as Feb date for a response has now been postponed).


----------



## Freshstart (30 Mar 2017)

It's also worth bearing in mind that when Padraic spoke to the finance committee he had cases with a variety of contracts. He had virtually identical contracts none of which stated a rate and had all been returned to between 1.1% and 3.25%. This would certainly need explaining in my opinion!


----------



## Somar (30 Mar 2017)

Hi Stitcher

What contact did you use in CB, to put your case forward?
Is Padraic Kissane looking after it for you?
Whom has informed you that you will have a response in June?

Listening to Padraic speaking in the Oireachdeas it would seem he has his research done on this margin issue and will put forward a strong case against PTSB.


----------



## Stitcher (30 Mar 2017)

Hi somar, 
Firstly i complained to the FSO in 2009 but they did not find in my favour so I thought that was it. I hadn't energy or money to go to high court . Then in 2015 i read about Padraic's activities and rang him and he thought i had a very good case so he is representing me now. Then I spoke on 9 o clock news at an meeting held by Padraic . Then i went to  ptsb agm last year as i have a very small share account from way back. I asked a question of the CEO (madding, mazring or some such, can't be bothered to remember his name to be honest). After that he said his people would be in touch. And they were. They told me then that my case would be part of the CAB review and I'd hear back in Feb. I wonder now are all discounted trackers part of the review? I  I would expect so if mine is there. Then in Feb they rang and said I wouldn't hear back  til June as review was taking longer than expected. I will go to AGM again in may and ask more questions. I don't see many like me on these tracker forums or threads but i am convinced that ptsb were underhand in how they sold these discounted trackers in 2007. Before 2007,  the discount was a genuine discount 0.6 reverting to 0.8 after a year but in late  2007/ early 2008 they introduced new  terms (special clause 9) that they did not explain to customers. Effectively they turned the 1 year discounted tracker into a 1 year tracker, like a 1 year fixed . But never explained that. They missold, and misadvertised this mortgage. I gave up a 1% tracker to switch to their 0.8 to save some money but it has cost me €40,000 extra so far. 
I would suggest any one with a question should ask their bank is their case part of the  the CB review. All banks had to identify what tracker mortgages were affected and so i reckon that almost all tracker products are up for review with CB, which is probably why it's taking so long. 

 I am putting my trust in this CB  review and PKs activities as hopefully the scale of the issues shows that there was a systematic approach to changing terms without telling customers upfront.


----------



## Somar (1 Apr 2017)

Thanks for reply stitcher.

Went through FSO also in 2012 but he ruled in favour of the bank also.

Was in touch with PTSB yesterday, they said my mortgage was part of the CB review but that no issues have been uncovered on that mortgage to date. They also said the review would not be complete until the end of this year.

Will be in touch with Padraic Kissane on Monday.


----------



## Stitcher (1 Apr 2017)

Hi Somar, 
Sorry to hear FSO also didn't find in your favour. I must ask PTSB if any issues have been uncovered with my mortgage to date as I've not been told that. They told me i might hear by June so will ask why then and not end of year. 
Stitcher


----------



## Somar (2 Apr 2017)

Hi Stitcher

PTSB informed me they have some sort of alert application on their systems and if their are any possible errors in the mortgage during the review they show up on their system.

Facts are, all tracker mortgage products sold by PTSB have been internally reviewed at this stage by PTSB themselves,and they are keeping their heads down in hope the CB won't uncover much more.

It will run for the remainder of the year at least if the CB investigate the margin issue in detail. If they don't then the banks will get off the hook big time.


----------

