# Central Bank has not approved the Prevailing Rate issues at ptsb and AIB



## Brendan Burgess (4 Apr 2017)

Michael McGrath brought this up with the Governor of the Central Bank today

[This is my quick transcription. It would be worth getting the full transcript when it's published.]

McGrath:

On the question of "What is the prevailing rate" How do you approach that question. The margin is not specified in the contract. What if there was no prevailing rate? How do you approach this question.

Governor: That is definitely one interpretation - the rate at which the mortage was drawn down
McGrath; That is not the bank's interpretation
Governor: That is one of the things we are engaging with the banks on. I don't want to say too much at this stage.
We have set out clear principles
These are live issues - so I don't want to go into more detail.


----------



## Sarenco (4 Apr 2017)

Brendan Burgess said:


> That is one of the things we are engaging with the banks on. I don't want to say too much at this stage



What a cop out!

I wonder will the Governor be asked why the deadline for completing Phase 2 was extended for a full year?


----------



## Brendan Burgess (4 Apr 2017)

Pearse Doherty backed up Michael McGrath brilliantly.


Doherty: The Prevailing Rate issue. There is a huge amount of anger here. Now they are on the high rate, they are

I understood that the redress programme has to be agreed by the CB.

Can you tell us if the Central Bank has signed off on that? Is the CB continuing to review that?
Is there any hope.

Sheridan:The CB has not signed off on this issue. It's one of many live issues.
It's not just contractual. Their scheme has to address the following three elements: 

Contractual
Transparency - What they were told then, since and now
Other influencing factors

Governor: Let me just reinforce that. Just because a firm says - This is what we think
, it does not mean we accept that.

There will be waves of revision.


----------



## ppcjbm (4 Apr 2017)

Brendan Burgess said:


> Michael McGrath brought this up with the Governor of the Central Bank today
> 
> McGrath:
> 90% of identified customers have been put on the correct rate.
> ...



Am i right to say this could now effect people who finished there fixed rate period and took a tracker at say 2.25 or 3.25 + ecbwhen there was no rate specified in there contract. But the rate when they drew down was say ecb+.8


----------



## Brendan Burgess (4 Apr 2017)

All we know is that the Central Bank has not approved the banks' approach. We don't know if they have disapproved of it. 

But bearing that it mind, you would be affected by this as well. 

Brendan


----------



## Suz2015 (4 Apr 2017)

Is there a glimmer of hope?


----------



## Somar (5 Apr 2017)

Brendan

Do the CB have any grounds to disapprove manufactured rates as up until lately they have had no power on capping or setting interest rates in banks in this country.

If the CB review findings indicate that these manufactured tracker rates which were added to the ECB rate to keep it higher than the SVR were not in keeping CB guidelines,what sanctions will be handed down to the banks and chief bankers (retired or not!)

If this scandal happened in the U.K. or Germany or any of the Scandinavian country's there would be absolute outrage.

Crimewatch run their programme every month on RTÉ on robberies, thief etc and many people in the nation tune in and are aware of these issues.
It's hard to believe the most calculated and organised thieft of hard working people's money by the banks in Ireland goes barely unnoticed day by day.


----------



## Brendan Burgess (5 Apr 2017)

Hi Somar 

Let's say you were running a mortgage bank in Ireland today and you decided that the appropriate non-tracker mortgage rate was 3%, what would you set the tracker mortgage rate at? 

Brendan


----------



## ppcjbm (5 Apr 2017)

Brendan Burgess said:


> Hi pp
> 
> There is no mention of trackers in the Consumer Credit Act.
> 
> ...


This is from a discussion some time ago. These notes are ptsb's own wording of what a tracker rate margin is and that can it never rise over the life time of a loan so I think it gives a good argument against them having a margin of 2.25 or 3.25 when at the time of draw down the margin was .8 or 1%


----------



## moneymakeover (5 Apr 2017)

Some commentators are suggesting ptsb is reasonably setting a new rate for customers who exit a fixed rate.


But according to Central Bank guidelines 


> These reviews are extensive in that lenders must review the underlying loan documentation and customer files for the in-scope accounts to determine their specific contractual obligations, and also to determine if the documentation that each customer received had the potential to confuse or mislead the customer, both on a stand-alone basis and when read in conjunction with other communications – be they written or verbal – made to the individual customer.




So a customer who fixed should not be penalised compared to a customer who didn't fix unless that was spelled out clearly at the time of fixing.


----------



## Somar (5 Apr 2017)

Hi Brendan

1 to 1.5% above the ECB rate same as the majority of EU banks.
Tracker Margin issues didn't arise in EU and UK banks as they don't have their non tracker rates inflated to the last as opposed to Irish banks.

I see your point that Irish banks had and still have to a certain degree the power to keep rates high, but the fact is PTSB and others mislead and induced customers off tracker rates at the end of their fixed rate period by offering them ECB + a margin rate slightly higher than the SVR.
I have no doubt about this systemic underhand manufacturing of rates PTSB conjured up back in 2008/2009 and hope that the top people in the CB have what it takes now to uncover the truth on this issue and hang out to dry those responsible and of course return the customers to their rightful trackers and more importantly for the CB to decide on the compensation for the customers according to the scale of the loss and not PTSB.
PTSB have made enough underhand decisions in relation to customers!!!


----------



## Brendan Burgess (5 Apr 2017)

Somar said:


> 1 to 1.5% above the ECB rate same as the majority of EU banks.



So you would charge 3% non tracker rate and 1.5% tracker rate.

That makes no sense.

The point I was making is that a tracker product which has a guaranteed margin should have been more expensive than the SVR. 

Many people seem to think it should have been cheaper which makes no sense at all. 

Let's be clear - I am the biggest critic and campaigner on high mortgage rates in Ireland and they should be reduced. But trackers should be more expensive than the non-tracker rates. 

Brendan


----------



## Somar (5 Apr 2017)

Brendan

An argument for another time maybe, but do you not agree with me that due to the manufacturing of tracker margin rates that took place in late 2008 and early 2009, PTSB induced customers off trackers and failed to inform them they would not be in a position to return to those trackers again.


----------

