# What type of properties are included in the redress scheme?



## Dan Murray (27 Jan 2018)

According to the Central Bank's FAQ....

*What type of mortgage is covered by the Examination?* 

The Examination covers all lenders that offered tracker mortgages to customers, including mortgages used for a family home or an investment property.

For the avoidance of doubt, does the redress scheme cover non-residential investment properties or is limited residential loans?


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## elacsaplau (28 Jan 2018)

Hi Dan,

My understanding was that the Redress Scheme was for residential only - I'm surprised by the quoted FAQ.


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## IdesofMarch (28 Jan 2018)

No, my understanding is the tracker redress programme is also available to companies with an annual turnover of less than 3 million euro. (Same criteria as FSO). Ger Deering when in front of the PAC committee, said he would look at all tracker mortgage complaints from companies (with above turnover or less) as well as individuals. All that is required is a final response from the financial institution concerned.


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## Dan Murray (28 Jan 2018)

Hi Ides & Elac,

Seems to be a bit of confusion here!

Ides, to be sure to be sure, are you saying that:

- (a) Ger Deering would look at all tracker complaints (so long as the €3m ceiling isn't breached), or

- (b) All  tracker complaints (so long as the €3m isn't breached) should fall into the redress scheme irrespective of the property involved.

I'm reading your post as a confirmation to (a) above - whereas I'm really enquiring about (b)!!


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## IdesofMarch (28 Jan 2018)

Dan Murray said:


> Hi Ides & Elac,
> 
> Seems to be a bit of confusion here!
> 
> ...




The CBI's framework for tracker redress for in scope mortgage accounts states it can be for private dwellings houses and btl properties. In my opinion this does not exclude commercially let properties. Maybe it will come down to that old nugget of what a consumer is?


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## RedOnion (28 Jan 2018)

The original question has nothing to do with the customer type, or definition of consumer. It's to do with the type of security and loan structure. The scope of the examination only covers Mortgage products. If not almost every commercial loan issued on a EURIBOR basis would be in scope for review.

Dan, I'm not sure what angle you're looking for, but some of the finance committee debates with Philip Lane might be interesting reading. 
https://beta.oireachtas.ie/en/debat...diture_and_reform_and_taoiseach/2017-10-19/2/


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## Jim Stafford (29 Jan 2018)

As the claims relate to a basic Breach of Contract, all lending is covered.

Jim Stafford


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## Dan Murray (29 Jan 2018)

Hi All,

The only question I have is whether non-residential properties are covered in the redress scheme or not.

To me, it seems that the term "buy-to-let properties" implies residential properties. Ides hols a different view. Which one is correct?

Jim - I don't understand why you have said "all claims that relate to a breach of contract" are covered. There is specific criteria for the cases that are included in the redress scheme - the redress scheme does not include all cases were a breach of contract is being disputed.


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## IdesofMarch (29 Jan 2018)

Dan Murray said:


> Hi All,
> 
> The only question I have is whether non-residential properties are covered in the redress scheme or not.
> 
> ...



Non residential properties are covered by the tracker redress. However the regulatory framework in the CBI guidelines refer to various consumer codes, so maybe email the CBI with your query to get a definitive answer


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## Sarenco (29 Jan 2018)

IdesofMarch said:


> Non residential properties are covered by the tracker redress.


Interesting.  Any basis for that claim?


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> Interesting.  Any basis for that claim?



Most commercial loans, as Red Onion has previously stated, track the euribor rate. This rate is a publicly quoted rate that both the borrower and the regulatory body can track, so it comes within the description of what a tracker interest rate is within the CBI guidelines. (See 3.4.1 of CBI December 2015 framework guidelines)


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## Sarenco (29 Jan 2018)

IdesofMarch said:


> Most commercial loans, as Red Onion has previously stated, track the euribor rate. This rate is a publicly quoted rate that both the borrower and the regulatory body can track, so it comes within the description of what a tracker interest rate is within the CBI guidelines. (See 3.4.1 of CBI December 2015 framework guidelines)


It's certainly true that the interest charged on a lot of commercial (non-residential) loans is linked to EURIBOR.  However, it doesn't necessarily follow that they are included in the Central Bank's redress scheme.


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> It's certainly true that the interest charged on a lot of commercial (non-residential) loans is linked to EURIBOR.  However, it doesn't necessarily follow that they are included in the Central Bank's redress scheme.





With all due respect it does not say that these loans are excluded. These rates do come within the CBI's own framework guideline description of what a tracker interest rate is. One can only take the CBI's framework guidelines at face value as you read them. Email the central bank at enquiries@central bank.ie to seek clarification on the issue if it troubles you.


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## IdesofMarch (29 Jan 2018)

Here is the extract from the CBI's Framework for conducting a mortgage tracker review that gives a definition of what a tracker interest rate is. The current CBI's investigation is to see whether these tracker rates were correctly applied by financial institutions. That is the nuts and bolts of the investigation.

"For the purposes of the Examination, a “Tracker Interest Rate” refers to the interest rate applied to a mortgage product: 1) which tracks a rate which comes from a publicly available source which can be verified by both the customer and the regulated entity, *including without limitation,* a rate that tracks the European Central Bank (ECB) main refinancing operations rate; and 2) which is calculated in a manner similar to a rate which falls within 1) above, and includes interest rates calculated on the basis of a fixed rate margin and/or pricing promise.

2 Both enduring and one-off contractual rights and options are to be included within the scope of the Examination."

Why on earth would tracker mortgages that track the euribor be excluded?


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## Sarenco (29 Jan 2018)

IdesofMarch said:


> With all due respect it does not say that these loans are excluded.


I didn't say they were.

You are asserting very baldly that non-residential loans are within scope.  I didn't try to contradict you - I just asked you what was the basis for your claim.

So far you've just offered us your opinion as to why you think these loans _should_ be in scope.


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> I didn't say they were.
> 
> You are asserting very baldly that non-residential loans are within scope.  I didn't try to contradict you - I just asked you what was the basis for your claim.
> 
> So far you've just offered us your opinion as to why you think these loans _should_ be in scope.



What is your basis for concluding that these types of mortgages are excluded ? What I can say, is that the CBI framework for conducting tracker mortgage investigations does not exclude them from such assessment.


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## RedOnion (29 Jan 2018)

The scope is limited firstly to mortgages, and within that to those which track an externally determined rate.
If it's not a mortgage, it's not in scope of this examination.


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## Sarenco (29 Jan 2018)

IdesofMarch said:


> What is your basis for concluding that these types of mortgages are excluded ?


Again, I didn't say that they were excluded.

I just asked you to back up your claim that they were in scope.  You haven't so far.


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> Again, I didn't say that they were excluded.
> 
> I just asked you to back up your claim that they were in scope.  You haven't so far.





I can't do that as I would be breaching client confidentiality, suffice to say that commercial borrowers are indeed included. Maybe you should contact the CBI and ask Dervil Rowland to state in writing to you that commercial borrowers are included within the framework and post same to this forum. I, on the other half, have no reason to back up my claim. Commercial borrowers affected may p.m. me anytime.  Sarenco, please do not waist any more of my valuable time as I will not be responding to your posts relating to this particular subject matter, but, from past behaviour, you will probable post some smart reply anyway!


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## IdesofMarch (29 Jan 2018)

RedOnion said:


> The scope is limited firstly to mortgages, and within that to those which track an externally determined rate.
> If it's not a mortgage, it's not in scope of this examination.



If there is a mortgage charge on your commercial property you have a mortgage as opposed to a loan (secured as oppose to unsecured). So most commercial mortgage holders are in scope.


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## Sarenco (29 Jan 2018)

IdesofMarch said:


> I can't do that as I would be breaching client confidentiality


Grand so, although it would have saved us a lot of time if you had just told us that in the first place.


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## Jim Stafford (29 Jan 2018)

The Central Bank review covered 2 million mortgages, including residential and commercial.  There is no doubt that the review includes commercial mortgages (Some of our clients have received redress letters on such mortgages.)

Jim Stafford


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> Grand so, although it would have saved us a lot of time if you had just told us that in the first place.



Sarenco,

Hang on a minute, Jim Stafford has not backed up his "claim" with real documentary evidence, but what he is saying is the truth. You have not asked him for the basis of his posts. You have been outed, stop trolling my posts asking me for the basis of my comments. I do not need to provide these to you, whoever you are.


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## Sarenco (29 Jan 2018)

I didn't ask you for documentary evidence - I simply asked what was the basis for your claim.

If you simply told us that you have clients with commercial mortgages that had been deemed in scope, as Jim did, I would have been more than happy to accept that at face value.  Why would I doubt your bona fides?

Instead, you initially offered your opinion as to why such mortgages _should _be in scope.  There is obviously a difference between opinions and facts.


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> I didn't ask you for documentary evidence - I simply asked what was the basis for your claim.
> 
> If you simply told us that you have clients with commercial mortgages that had been deemed in scope, as Jim did, I would have been more than happy to accept that at face value.  Why would I doubt your bona fides?
> 
> Instead, you initially offered your opinion as to why such mortgages _should _be in scope.  There is obviously a difference between opinions and facts.



What I do not understand is why ask a question when you know the answer. Please go away and bother someone else.


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## Sarenco (29 Jan 2018)

I didn't know the basis for your claim - that's why I asked the question!


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## IdesofMarch (29 Jan 2018)

yeah, yeah, yeah. Yadi ya. Pull the other one, it has bells on it.


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## Sarenco (29 Jan 2018)

Sorry Ides but I genuinely did not know the basis for your claim and hence the question.  I've no idea why you would think otherwise.


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## IdesofMarch (29 Jan 2018)

Read the CBI's framework for conducting tracker review dated December 2015 that I alluded to, before posting, you are literate. It is obvious that commercial loans are included. I even posted the CBI's definition of what a tracker interest rate is, to the thread and still the penny didn't drop. Come off it, you appear to be a learned legal eagle from your "bald assertion" remark directed at me earlier in the thread, you knew and knew only to well. 2+2 =4


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## Webster (29 Jan 2018)

First post, but have been a fan of the site for a while. Feel I need to commemt. I have to thank IdesofMarch and Jim Stafford for their enlightening posts regarding what properties are included in the tracker redress. I will be sending a complaint regarding my euribor commercial mortgages to my bank.  I find that poster Sarenco is confrontational and has added nothing noteworthy to the thread. Just an observation.


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## elacsaplau (29 Jan 2018)

I must admit to be struggling to see why Sarenco is being subjected to such ire. From what I can see, he was just seeking clarification of the facts.

The OP's question, which Sarenco correctly noted, was not what type of mortgage is included but rather what type of property.

The guidelines refer to "buy to let" properties. I just don't see how it is obvious from this that other commercial loans are automatically included. I would have thought the opposite. Also, my sister had a commercial mortgage (on a tracker basis) and her bank told her that it did not qualify for redress. When she queried it, her bank quoted the CBI framework to her!

So, it seems that both Jim Stafford and IdesofMarch have come across commercial cases which have been treated within the redress exam. One possible explanation for this might be that different banks are taking different positions regarding this.

All that said, what is obvious is that commercial mortgages for consumers should be included in the redress exam.


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## Sarenco (29 Jan 2018)

IdesofMarch said:


> Read the CBI's framework for conducting tracker review dated December 2015 that I alluded to, before posting, you are literate. It is obvious that commercial loans are included.


Well, it certainly wasn't obvious to me that non-residential commercial loans were in scope – if it was I would have answered Dan's question myself. 

As you pointed out yourself, the Central Bank's framework document only refers to PDH and BTL loans.  If I take out a commercial loan to purchase my business premises that is obviously neither a PDH nor a BTL loan.

For the avoidance of any doubt, I am not disputing that as a matter of fact that commercial mortgages are being treated as being in scope.


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> Well, it certainly wasn't obvious to me that non-residential commercial loans were in scope – if it was I would have answered Dan's question myself.
> 
> As you pointed out yourself, the Central Bank's framework document only refers to PDH and BTL loans.  If I take out a commercial loan to purchase my business premises that is obviously neither a PDH nor a BTL loan.
> 
> For the avoidance of any doubt, I am not disputing that as a matter of fact that commercial mortgages are being treated as being in scope.



Then what are you disputing? As a by the way, if you take out a commercial loan to purchase your business premises and you let the premise to your business, then it is a btl loan.


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## Sarenco (29 Jan 2018)

I'm not disputing the factual position – I really couldn't have any clearer on that point.

If I take out a loan to purchase a premises from which I intend to operate my business that is clearly not a BTL (buy to let) loan.  I'm not buying the property with a view to letting it to anybody.


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> I'm not disputing the factual position – I really couldn't have any clearer on that point.
> 
> If I take out a loan to purchase a premises from which I intend to operate my business that is clearly not a BTL (buy to let) loan.  I'm not buying the property with a view to letting it to anybody.



Why on God's earth would you do that! You would have to be the Forest Gump of company structuring to be that stupid. I would say that cohort of commercial borrowers numbers "1" at the most. That probably being  elacsaplau, seeing that he liked your inane post. Next!


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## Dan Murray (29 Jan 2018)

Hi All,

Thanks for all your contributions. Much appreciated.

Thankfully, it will be a good while before the case I'm involved in goes to mediation (if at all). In the meantime, I think I'll just write to the Central Bank and ask them for clarification on what properties are included. Hopefully, they will be able to come back over the next few weeks.


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## Sarenco (29 Jan 2018)

IdesofMarch said:


> Why on God's earth would you do that!


Why would I purchase my own business premises?  To avoid having to rent my premises from somebody else or because it happened to be for sale at a good price.

You might consider laying off the invective.


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## IdesofMarch (29 Jan 2018)

Why not rent your newly purchased commercial premises to your business matching the monthly rental to the cost of funding the commercial mortgage?


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## Sarenco (29 Jan 2018)

IdesofMarch said:


> Why not rent your newly purchased commercial premises to your business ?


I'm really not sure what that has to do with the topic under discussion.


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> I'm really not sure what that has to do with the topic under discussion.


Because you came out with an inane and insane situation were a commercial mortgage would not be included in the CBI's Framework for conducting a Mortgage  Tracker Review.


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## Sarenco (29 Jan 2018)

No, I didn't.  Once again, I never said that commercial mortgages were not in scope. 

For the second time, I would respectfully ask you to lay off the invective.


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## RedOnion (29 Jan 2018)

Getting back to the original question, as entertaining as this thread is. 

It's a big jump to go from an example of a customer receiving redress, to saying all commercial loans are in scope.

The initial scope of examination related to mortgages. The letter of 22nd Dec 2015 was only sent to those 15 lenders who had issued PDH or BTL mortgages, and the letter spoke of PDH and BTL only, and is what the initial 2m accounts is based on. The normal meaning of buy-to-let mortgage as used by CBI relates to residential investment property. They did not issue the letter to lenders who had issued commercial loans by way of a mortgage charge on non residential property.

CBI have clarified that commercial loans (whether mortgage or not) are in scope where the loan is secured against a home. That brings a lot of small business loans into scope. It may also bring cross-collateralised into scope.

Some lenders, as part of their tracker review, have identified issues within their wider commercial and personal loan books. These were not in the initial examination scope, and are not included in the CBI impacted numbers. UB is an example where they have announced that they have made a financial provision for such issues, but that number is reported separate to their tracker redress number.


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> I'm not disputing the factual position – I really couldn't have any clearer on that point.
> 
> If I take out a loan to purchase a premises from which I intend to operate my business that is clearly not a BTL (buy to let) loan.  I'm not buying the property with a view to letting it to anybody.




Yes you did!


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## Sarenco (29 Jan 2018)

IdesofMarch said:


> Yes you did!


No, I didn't.  I really couldn't have been clearer on that point -


Sarenco said:


> For the avoidance of any doubt, I am not disputing that as a matter of fact that commercial mortgages are being treated as being in scope.


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## Sarenco (29 Jan 2018)

RedOnion said:


> CBI have clarified that commercial loans (whether mortgage or not) are in scope where the loan is secured against a home


So the answer to Dan's original question is that loans secured on non-residential property are out of scope.  Right?


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## RedOnion (29 Jan 2018)

Sarenco said:


> So the answer to Dan's original question is that loans secured on non-residential property are out of scope.  Right?


That is my understanding. Unless CBI have changed their mind since the letter dated 22 Dec 2015.


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> No, I didn't.  I really couldn't have been clearer on that point -



Look at the example that I quoted in my last post above (post 124). Yes you did! It was an inane example of how not to purchase tax efficient commercial property. The obvious thing to do to reduce your liabilities, would be for you to rent your recently purchased commercial premises (with the commercial mortgage) to your business.


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## Sarenco (29 Jan 2018)

IdesofMarch said:


> Yes you did


No Ides, I didn't.  However, I would like to thank you for the unsolicited tax advice - very helpful I must say.

So, after all that we still seem to have contradictory views as to whether loans secured on non-residential property are in scope.  Hopefully Dan will clarify the matter with the Central Bank and report back to us.


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## IdesofMarch (29 Jan 2018)

Sarenco said:


> No Ides, I didn't.  However, I would like to thank you for the unsolicited tax advice - very helpful I must say.
> 
> So, after all that we still seem to have contradictory views as to whether loans secured on non-residential property are in scope.  Hopefully Dan will clarify the matter with the Central Bank and report back to us.



Your more than welcome, looks like you need it if you intend to dip your beak into any commercial property venture. Ha!


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## IdesofMarch (29 Jan 2018)

RedOnion said:


> CBI have clarified that commercial loans (whether mortgage or not) are in scope where the loan is secured against a home. That brings a lot of small business loans into scope. It may also bring cross-collateralised into scope.



Red Onion,

Cross collateralisation on commercial properties is a big issue that will bring most if not all commercial non residential loans into the CBI scope, as banks, particularly Ulster bank, tended to increase their security on these types of mortgages after 2009, in return for a favourable annual review.


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## RedOnion (29 Jan 2018)

Yes, the cross collateralised loans pose a particular complexity. However my understanding, and this is from a very early stage in the review, is that one of the secured assets had to be a residential property to be in scope.
Of course issues identified outside of the scope should also be addressed by the lenders.


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## Dan Murray (30 Jan 2018)

Thanks Red

When it comes to this stuff - you knows your onions!

Fair play....


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## Sarenco (30 Jan 2018)

FWIW, I was chatting earlier today with a contact in one of the major audit firms that is heavily involved with the Central Bank's tracker investigation process.

She was adamant that only loans that are secured on residential properties are within scope.

I appreciate that flatly contradicts what Ides is saying but there it is.


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## Dan Murray (30 Jan 2018)

Sarenco said:


> I appreciate that flatly contradicts what Ides is saying but there it is.



Hi Sarenco,

It also contradicts what Jim Stafford is saying?

It's extraordinary that there is still such confusion. It's also extraordinary if non-residential properties are excluded - as in, why would the Central Bank not wish to protect the Consumer - all Consumers (as per their definition)?

In advance of writing to the Central Bank, I've been doing a bit of research. When I complimented RedOnion earlier, it was out of gratitude for providing the link to the Finance Committee link which I was in the middle of reading. My understanding of this is that the Governor said that commercial mortgages should be included!! The caveat is that he did not use those precise words but that certainly was my understanding of what he was saying.

Curious and curiouser.

Sorry a bit rushed - need to head out....


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## Sarenco (30 Jan 2018)

Dan Murray said:


> It also contradicts what Jim Stafford is saying?


Not necessarily - a commercial loan could be secured against a residential property and would therefore be in scope.


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## Webster (30 Jan 2018)

.


Dan Murray said:


> Hi Sarenco,
> 
> It also contradicts what Jim Stafford is saying?
> 
> ...



Dan,

I contacted my bank and told them about my commercial mortgage. The staff member asked what rate I was tracking I said x% over Euribor. They passed me over to a supervisor who said that I am within scope for tracker examination. They said I could write or email. I will be sending a registered letter to them as I have heard of horror stories of correspondence going missing (yes, including emails)


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## IdesofMarch (30 Jan 2018)

I think most if not all commercial mortgages are in scope, why wouldn’t they be. If a bank is ripping off an individual, it shouldn’t make a difference what category of customer they are. I believe the review by the CBI is all about whether you were denied a tracker rate or put on the wrong one. Most FI's included the dreaded all sums charge, or cross collateralisation of the loan, linking a commercial mortgage to any other mortgages that the borrower has or will have in the future.


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## Webster (30 Jan 2018)

I will keep the forum updated regarding my complaint.


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## Brendan Burgess (30 Jan 2018)

As this has deteriorated into a personalised slagging match, I am closing the thread.


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