# BoI before  Finance Committee now live...



## Brendan Burgess (24 Jan 2018)

At 7.15 pm. 

Brendan


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## Pewter (29 Jan 2018)

Thanks Brendan.  Will be interesting to see if the issue of the announcement to staff on the two year rate (i.e. that they would roll on to the tracker)  is followed up on (Liam McL was asked about it the last time and said he didn't know about it but would dig out the communication). Will be watching with keen interest.


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## TMH2017 (29 Jan 2018)

I have emailed some members of the finance committee this evening so hopefully the issue will be raised.


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## moneymakeover (30 Jan 2018)

Is there a channel on sky to watch?
Or only internet?


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## Brendan Burgess (30 Jan 2018)

Hi mm

You can watch Oireachtas TV on Sky 
http://www.oireachtas.ie/parliament/watchlisten/watchoireachtastv/

But that is whatever they choose to broadcast, which probably won't be the Finance Committee.

Brendan


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## Brendan Burgess (30 Jan 2018)

It will be here
http://www.oireachtas.ie/parliament/watchlisten/watchlive/committeeroom2/


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## Brendan Burgess (30 Jan 2018)

They are off

Francesca McDonagh 
Stephen Mason - Head of Customer Operations (Used to be in charge of arrears.)
John O'Beirne - Head of Products ( He is in charge of trackers.)

We did not move fast enough.
We did not go far enough.
I apologise
I conducted a review
We placed too much emphasis on the legal position.

I put resolving the tracker issue to the top of my priority list.

4 points
Our progress
Our understanding that we cant reverse the damage on our customers
The additional customers announced in November
Our determination to reverse the negative impact

9,400 customers affected
1) Those who were denied trackers - 6,000
2) Those who were on trackers, but the wrong rate     3,4000

All have been returned to the right rate.
We have contacted 9/10 with an offer of redress

Over 5,000 have received redress and compensation

I went through some difficult cases in detail myself.
One who faced losing their home; One who was going through serious health problems.

In Dec we increased the amount we pay for legal advice.

We are also acting on feedback from all stake holders

Our Appeals Panel is now completely in place.

We were challenged by the CB. The Board gave me a mandate to take a fresh look at the tracker issue.

A clear emphasis had been placed on our legal position. While we had listened to the customer's voice, but not enough. 

So I recommended including the additional 6,000 customers and the board enthusiastically agreed. 


Banking is based on trust.  Our trust has been broken. 

Ireland needs a stable banking sector. The way we deal with trackers will reflect on us. 

We have defined key values to embed behaviour


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## Brendan Burgess (30 Jan 2018)

Pearse Doherty clarifying the numbers

Francesca:
9,400 have been identified
1,000 to be contacted - some of them are the more complex cases

Pearse: There are 3 legal cases against the bank

If a court awards €20k to someone who has been in the courts, will you review your approach on other cases?

Francesca: We look at these difficult cases, individually.

Hopefully, they won't even go to the Appeals Panel. We can resolve them directly with the borrowers.

our intention is to be:  fair, transparent and quick

We have not stripped emotion from it.

We would like to resolve the cases directly. But they are free to go to the Appeals Panel.

*Pearse *
A lot of people are not empowered to appeal
Why did you not write to people asking them how they had been affected?

Francesca:
Let me set out the process...

*Pearse: *
Was everything legal?

Francesca:  Our letters were not clear enough

In Dec 2016, there were 600 legally black and white cases where they lost the tracker, but they had a legal right to one. They were denied their legal right.

Pearse: How did this happen?  Who was responsible? Were targets set for reducing the number of trackers?

Francesca: Look at the context in 2008 when the tracker product was discontinued.  We are conducting a review to see what happened.  The product was not profitable when the stability of the banking sector was at risk.

In Oct 2008, we stopped offering them to new customers.

At the time, we considered what would happen to customers with entitlement to trackers.
20,000 customers who were on fixed rates rolled over onto tracker rates.

But that application was not consistent.

I have seen no evidence of intent.

Pearse: Your staff
There are large numbers of your staff whom you are still refusing the return of their tracker.
%
Those on a two year fixed rate.  Were promised at ECB + 0.75% . (Reads out the internal document.)

Francesca

Of the 6,000 we addressed, there is a group of current and former staff. WE are treating them like any other customers.  We have included 1,850 ex and current staff. That is because of confusion.

John O'Beirne
The cohort you are talking about - Oct 2008 it was issued - The majority of them did roll back. 

Pearse: People who are "currently on the two year" who were not on trackers before they fixed, did not get trackers.

Francesca: I don't know that particular case, but you can talk to us afterwards about it.


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## Brendan Burgess (30 Jan 2018)

*Michael McGrath 
*
Are you saying that there is no cohort of staff who were never on a tracker who are entitled to trackers.

O'Beirne
If they were on a tracker, they will be put back.
If they were never on a tracker, they won't be put back.
That memo says "You will roll back to the previous rate" , although it was not clear later in the memo, we issued a new memo later that month. Within 3 weeks of that memo.  We acknowledge that that memo was not clear enough.

McGrath: How many customers in that category

O'Beirne - I don't know, but it's relatively small.

Francesca: Where there is doubt, we give the benefit of the doubt to the customer.

McGrath: There is an arguable case that they had an entitlement, or at least an expectation.

Please describe the extra 6,000 admitted in November

Francesca:

3 groups
1) Staff where the communication was not clear
2) The single largest group were product switchers: (the average customer will switch 6 times during the life of a mortgage) - one case had switched 17 times.
There was confusion about the terminology - they did not draw down a tracker at the start, but during one of the switches, they had a tracker.
3) The 2006 CPC requirements - required clarity. There was a group before 2006 and we agreed to restore them although the CPC did not apply.  We thought that an arbitrary date was unfair.

There are two documents
The key one is the offer letter
The second one is the Mortgage Form of Authorisation when they do a product switch


McGrath: Who is doing the review
Francesca:

McGrath - looking at the correspondence you are sending out.  I think that the manner of the correspondence is quite confusing. The table is very difficult for anyone even for a professional advisor to understand . it would have been easier to issue a revised statement.
Are you satisfied with the format of the tables?
Are you sure that you got your calculations correct

[big delay in answering]

Francesca: I looked at those letter before they went out. We believed in giving a lot of information. We have looked at ways of improving it. The letters are appropriate.  They are accompanied by a call to the customer.

In terms of the calculation, we believe it's correct and accurate.


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## Brendan Burgess (30 Jan 2018)

*Senator ConwayWalsh*
asks about intent

Francesca: We found no evidence of intent. 

Conway Walsh
Did none of your legal advisors not alert you to the illegality?


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## Brendan Burgess (30 Jan 2018)

14 customers have lost their properties as a direct result of losing their tracker.

8 owner occupied - all were via agreed sale. One was a trade down to a more affordable property.
6 others

Conway Walsh: Do you have the houses?

Francesca: Only 1 and we will be offering that back.  one is mortgage to rent. 6 were consenual sales.

In one case a borrower got €250k for loss of ownership. The minimum was €50k

On top of the compensation, any residual debt has been written off. Any payments towards the residual debt

Any gain in value since then will be given back to the customer.

We will also look to calculate a Future Value of the tracker.

Finally, if the customer wishes, we will help them buy a home with a tracker.


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## Brendan Burgess (30 Jan 2018)

Conway Walsh: You charged a 1% premium on buy to lets in arrears

The CB said this can only be done if there is no other alternative sustainable solution.  The Ombudsman and Minister for Finance have also condemned it.


Are you saying that it's ok because they are not homes

O'Beirne: Buy to lets are not covered by the CCMA. The process and product applied was to move it to a Buy to Let + 1%.  A number of customers have that. They were in keeping with the regulation.

We will keep it in under review.

They are not considered impacted customers.

Francesca: My focus was on the impacted customers as a first priority.

CW: This is very clearly exploitation of vulnerable customers.

Francesca: The Ombudsman found in our favour in a particular case, but we will keep it under review


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## Brendan Burgess (30 Jan 2018)

Our average compensation is 21% of  the redress. 

€363k is the highest payment so far.


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## Brendan Burgess (30 Jan 2018)

Francesca (In response to Senator Horkan) 

We appointed an senior executive as a customer advocate.
We could have gone further and appointed some external person


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## Brendan Burgess (30 Jan 2018)

Francesca: We also found 1,800 customers which we undercharged. We did not pursue those customers.


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## moneymakeover (30 Jan 2018)

They are saying only 6 buy to let properties were sold as result of loss of tracker?
I find that difficult to believe.

According to John O'Beirne the compensation before any appeal:

·  Any residual debt to be written off

·  Minimum of €50,000 compensation per property

·  Any gain in the market since to be reimbursed

·  The residual value of the tracker to be reimbursed

·  BOI to assist purchase of a similar property if required and restore of tracker loan

Personally speaking, I had to sell two overseas properties to avoid legal repossession.

If a buy to let property is overseas does that count in the eyes of BOI?


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## Brendan Burgess (30 Jan 2018)

moneymakeover said:


> Personally speaking, I had to sell two overseas properties to avoid legal repossession.



But was it as a result of losing your tracker? 

How much were your arrears?  How much were you overcharged.

A lot of people who lost their trackers lost their homes, but very few lost their homes because of the loss of the tracker.

Brendan


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## TMH2017 (30 Jan 2018)

Pearse Doherty was excellent tonight especially on the remaining boi staff cohort who are still deemed not impacted (promised a tracker post fixed rate but was never on one previously) seems like there are c. 150/200 of us, hopefully this will provide impetus for this to get sorted


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## moneymakeover (30 Jan 2018)

A direct condition of avoiding repossession of everything was to sell something to reduce the borrowing

Had I not lost the tracker I would have been able to make the payments.

In 2014 ECB was 0.05
My rate should have been ECB +1.05 = 1.1%

Instead BOI was charging me 5.65%

Interest was 5 times what it should have been


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## Brendan Burgess (31 Jan 2018)

Hi mm

By how much were you in arrears? 
How much was the overcharge on the date you voluntarily sold? 

Brendan


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## moneymakeover (31 Jan 2018)

Two years into the overcharging

Can't remember the arrears offhand

Key point is there could have been some arrangement regarding the capital eg longer term

The interest was demanded and that was significant at 5.65%. There was no discussion about that or reducing the rate.

I pointed out I should be on tracker at the time but no reasoning with them. No consideration of the high interest rate.


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## Pewter (31 Jan 2018)

Just a point on the two year rate issue that Pearse and Michael so ably argued. I don't think John O'Beirne was completely straightforward on this.  I didn't want to clog up this thread about it as it's a single issue so i've updated it on the 'Bank of Ireland Staff Update December 2017" thread.


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## deanpark (31 Jan 2018)

Can anybody clarify if BoI's minimum 50k euro compensation applies to BTLs or is it referring to PDHs. 

AIB offering 25k euro for BTLs that were sold.  My question is based around if BoI are offering more to their affected BTL customers than AIB are.

Thanks.


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