# Compensation Rates on Tracker Redress



## BOBW78 (30 Oct 2018)

I got compensation of 10% from Bank Of Ireland.

How are banks being allowed to use a % of redress amount as a basis of calculation instead of an actual interest rate calculation methodology. 

Using interest rate methodology, my compensation effectively means that I lent money to BoI at 2.8% for the past 10 years (monthly compounding as in a mortgage).

I appealed the amount based on the methodology used but my appeal was rejected. How can using this methodology be deemed to be fair?


----------



## RedOnion (30 Oct 2018)

Deleted.


----------



## BOBW78 (30 Oct 2018)

Time value of money calculations are at interbank rates (which is what time value of money means).

Money borrowed and lent is subject to duration and credit charges over and above this.

The point is that this needs to be the basis of the calculation methodology, not a flat percentage compensation amount.

In my case, since I was incorrectly not on a tracker rate for 10+ years, the compound interest on my overpayments should form the majority of the compensation owed, but the back have used a method which ignores this fact.

All banking works off this methodology, so the compensation calculation methodology should work off it also.


----------



## RedOnion (30 Oct 2018)

Deleted.


----------



## BOBW78 (30 Oct 2018)

**


----------



## BOBW78 (30 Oct 2018)

I think that what you are confusing it that the time value of money calculation at the corrected rate doesn't make sense when compensation is being discussed; in this case the time value of money rate needs to be at a compensation rate, which is the point i am making.

Getting 10% compensation, in my case, gives me a 2.8% "time value of money" rate.

Larger payments will most likely be over longer periods, whereby this will work in the banks favour.

The point is that you cannot assess whether x% is a fair amount doing it the way the banks are. 

And it greatly overstates the compensation, for example i am getting 2.8% effective compound interest on my accreting interest overpayments, whereas the bank are saying that i am getting compensation of 10%.


----------

