# For someone who broke out of a ptsb fixed rate early, what should the prevailing date and rate be?



## John Hayes (2 Aug 2016)

[copied from another thread and edited to focus on the key point about the date and rate - Brendan]

Just to update people on an appeal I have with the Ombudsman:
My fixed rate with permnanent tsb was due to lapse in January 2010. I left the bank in April 2010. I asked for my tracker rate back at 1.1% and a refund/redress of €30000 for the money I have overpaid in mortgage repayments vs the money I should have repaid. I appealed to the Ombudsman and Permanent tsb wrote back with the following.

*Bank’s proposal to settle the complaint-*
1. Offer Tracker Mortgage of ECB + 3.25% - subject to applicants meeting our credit criteria

...

This isnt worth very much to me as the ECB rate in January 2010 was 1% so they would calculate my redress based on an interest rate of 4.25%. I broke from my fixed rate in January 2009 (without a penalty!). Does anyone think I should be offered the tracker rate that permanent tsb had in 2009 of ECB +2.25% as opposed to the rate of ECB +3.25% that was being offered in January 2010. My contract doesnt gve a specified interest rate but it says 

"_On expiry of the fixed rate period without affecting the entitlement of the applicant to apply at any time to fix the rate for a further period (if available), the interest rate applicable to the loan will be the then *Permanent tsb *tracker mortgage rate appropriate to the loan...." 
_
Could breaking from my fixed rate early work to my advantage by entitling me to the tracker rate that was on offer in January 2009 as opposed to that on offer in January 2010?
Paul.


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## Pinesky (2 Aug 2016)

You should be entitled to the tracker rate at the date you terminated your fixed rate agreement. I presume this was done in line with your original contract in that you gave notice , and the fixed rate funding fee was either nil or waived by PTSB . I am aware of a case with another bank where the funding fee  was paid and the customer was eventually restored to a tracker backdated to the date of breakage and not to the date of the natural expiry of the fixed rate contract .


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## joe351980 (2 Aug 2016)

Hi John, instead of saying 'breaking from your fixed rate period early' think of it as 'reducing the fixed rate period by mutual consent'. You didn't break the contract by reducing the term. Ptsb broke the contract by not making the current tracker rate (09) available at that time


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## John Hayes (2 Aug 2016)

Pinesky, yes I wrote to the bank on January 22nd 2009 asking to revert to a variable rate and the bank backdated the variable rate to January 1st 2009.


Great wording Joe351980!! Those words of yours would make my case a lot stronger.


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## Thomas (2 Aug 2016)

Pinesky - which bank gave the break date rate as that would be great to know for cases like mine where the prevailing rate on expiry of the fixed period is far higher than it would be on the break date (3.25% vs 1.68%)!


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## Pinesky (2 Aug 2016)

Thomas said:


> Pinesky - which bank gave the break date rate as that would be great to know for cases like mine where the prevailing rate on expiry of the fixed period is far higher than it would be on the break date (3.25% vs 1.68%)!


The customer had his tracker restored to the rate on his original contract. The bank denied him the tracker for 6 years odd but restored it from the break date in thel fixed rate contract .there was no dispute over the rate .
It was BOIMB .


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## Thomas (2 Aug 2016)

Thanks for that - interesting as all the PTSB redress and rates were from the expiry of the fixed rate period and not the break date.  did he get it through the FSO or just dealing with the bank directly himself?


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## Pinesky (2 Aug 2016)

I'd rather not go into it anymore but I'm certain someone made representations on his behalf. I don't think FSO was involved  ever .


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## Brendan Burgess (2 Aug 2016)

Pinesky

That is very interesting and it makes the claim for the earlier date much stronger.

Thomas had a fixed term contract of two years.
He had a right to terminate it early and revert to the prevailing tracker rate.
ptsb had a right to charge him a break fee.
ptsb waived the break fee. They had no obligation to do so.

Here is the wording on Thomas's contract:






So ptsb will argue that the period expired at the end of two years.

But Thomas will argue that the period expired at the end of one year, when ptsb agreed to expire the contract. 

Of course, what BoI did has no precedent value for ptsb.  Unless there was FSO or legal involvement.

Brendan


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## Sarenco (2 Aug 2016)

Brendan Burgess said:


> So ptsb will argue that the period expired at the end of two years.



Oh, I don't think they'll have the nerve to try and run that argument again!


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## Brendan Burgess (2 Aug 2016)

Hi Sarenco

That is exactly their argument.  They have put everyone on the rate "prevailing" on the date on which the fixed rate was due to expire, not the date it was terminated early.  And clearly the Central Bank has supported this. 

It seems to me that this would be a much better issue to challenge than their right to set the prevailing rate. 

Brendan


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## Sarenco (2 Aug 2016)

Have they actually stated that's their position?  That's extraordinary.

Where relevant, the clause says "*on expiry* of the fixed rate period...the interest rate applicable ...will be *the then current *permanent tsb Tracker Mortgage rate applicable to the Loan".

The fixed rate period clearly expired as of the date that the fixed term period actually ended with the agreement of both parties rather than the date it was originally scheduled to end.

When PTSB originally sought to argue in the High Court that the fixed rate term did not expire until the originally scheduled expiry date, this argument was described in the following memorable terms by Justice Hogan:

_"This, undoubtedly, is a sophisticated and clever argument which, for example, had it been advanced in an undergraduate law examination would have attracted high praise from the examiners as an original demonstration of legal craft and skill. But this type of argument should really have no place in the construction of financial documents involving retail customers...Given the huge implications for the customer, if a key clause of this kind is to bear this sophisticated construction, it behoves the Bank to spell this out in plain language for the benefit of all customers, and not simply those who have either an amateur or professional interest in the niceties of the law relating to the construction of contracts who might otherwise be able to glean this vital piece of information unaided."_


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## Brendan Burgess (2 Aug 2016)

Sarenco

I have quoted that paragraph at the ptsb AGM's but didn't tie it in with this argument.  Thomas here is the full quote from the case 

http://www.askaboutmoney.com/thread...nst-ptsb-on-loss-of-tracker-mortgages.172318/


*The construction of the special condition*
42. So far as special condition 7 is concerned, I cannot disagree with the Ombudsman's finding that the clause lacks sufficient clarity on the key question of whether a break in the fixed rate would affect the entitlement of the borrower to revert to the tracker rate. In fact, special condition 7 says nothing which would alert even a prudent borrower to the fact that he or she would not be entitled to a tracker mortgage at the end of the otherwise fixed period if the previously agreed rate had been broken. It is true that special condition 7's commitment to the tracker rate is prefaced by the words "on expiry of the fixed rate period." The Bank contend that these words ("...on expiry ...") necessarily mean- or perhaps imply- that the commitment subsists only for so long as the borrower does not switch during that period, because otherwise the fixed rate period would not have "expired".


43. This, undoubtedly, is a sophisticated and clever argument which, for example, had it been advanced in an undergraduate law examination would have attracted high praise from the examiners as an original demonstration of legal craft and skill. But this type of argument should really have no place in the construction of financial documents involving retail customers, even if- as the Bank contends, but the Healys deny- the customers are to be regarded as experienced investors and even if (as here) they had access to independent legal advice. Given the huge implications for the customer, if a key clause of this kind is to bear this sophisticated construction, it behoves the Bank to spell this out in plain language for the benefit of all customers, and not simply those who have either an amateur or professional interest in the niceties of the law relating to the construction of contracts who might otherwise be able to glean this vital piece of information unaided. Or, at all events, the Ombudsman is entitled so to think.


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## joe351980 (4 Aug 2016)

PTSB say the mistake they made was not informing people of their contractual rights. And that if they had customers wouldn't of broke out of their contract.
If I had my contract on hand in 09 I still would of broke early

CUSTOMER . 'Hello can I terminate my fix rate period 
PTSB  'Yes'
CUSTOMER  'Is their a fee for same'
PTSB   'No'
CUSTOMER 'Could you put me on the prevailing tracker rate as per my contract'

Would PTSB not have to honour the contract and make tracker rate available to me as of date fixed rate ended.
It doesn't say after 2 years I should be offered tracker rate, it says after fixed I should be offered tracker.
Contract is actually very clear about this and the penalty for breaking early and that is not loosing your right to tracker


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