Case study AIB break fee not in line with other banks?

[_ripped_off]

Hi all,

Just wondering if you’ve had any update from AIB. I’m in a very similar position to _ripped_off, just been quoted €3,765 to break a 5 year fixed term (drawndown in July 2017) at 3.8% with €140,000 remaining (original amount was €150,000) and I’m stunned to say the least.

Thanks.

My complaint is with AIB at the moment so fingers crossed for an outcome in my favor. I’ll let you know if I hear anything. I expect they have an obligation to at least respond within the next couple of days.

 

[dannyh79]

Hi All,

I FINALLY received confirmation from AIB on the assumptions of the calculation (it took 7 weeks of haranguing them to get it)

And it’s been calculated in the same way

Difference between 3.80% (rate I took the mortgage out on) and 2.85% (banks current 4 year fixed rate as I have 38months left).

I have 140,514.04 outstanding x 38/12 x 0.95% giving a breakage fee of €4,227.13 and with NPV factored in a total of €3,765.40.

The only explanation for this cost is that AIB Mortgage Bank has outstanding obligations for 38months to its fixed rate.

So I’m just wondering if you got anywhere with the complaint and if so redonion if you wouldn’t mind providing the wording for the complaint I’d also like to try my luck (sorry if you did post it and I missed it)

Thanks.

 

[_ripped_off]

Hi All,

I FINALLY received confirmation from AIB on the assumptions of the calculation (it took 7 weeks of haranguing them to get it)

And it’s been calculated in the same way

Difference between 3.80% (rate I took the mortgage out on) and 2.85% (banks current 4 year fixed rate as I have 38months left).

I have 140,514.04 outstanding x 38/12 x 0.95% giving a breakage fee of €4,227.13 and with NPV factored in a total of €3,765.40.

The only explanation for this cost is that AIB Mortgage Bank has outstanding obligations for 38months to its fixed rate.

So I’m just wondering if you got anywhere with the complaint and if so redonion if you wouldn’t mind providing the wording for the complaint I’d also like to try my luck (sorry if you did post it and I missed it)

Thanks.

Hi Dannyh79.
I think red onion is offline for a couple of weeks.
AIB did not address any of the points I made in my complaint letter and effectively will not tell me what their “obligations” are or what the actual financial loss to them is.
I have now referred my complaint to the ombudsman so it’s gonna drag on another while.

 

[_ripped_off]

Also Danny check your inbox on this site (little envelope up the top) maybe red gave you the complaint wording in there rather than in this thread.

 

[RedOnion]

@dannyh79
I'll send you a draft over the next few days. In your case, using interbank rates, your break fee would be a bit over 2,000 as funding rates have dropped since you fixed.

 

[_ripped_off]

Anyone else notice this recently on AIB’s website...
“We will also conduct a second calculation, where we will change one of the components that we use to calculate early breakage cost. The same formula (A) x (U) x (D%) = early breakage cost is used but (D) in the formula becomes: The difference between the market interest rate applicable at the start of the fixed period, and the market interest rate applicable at the time of the early repayment, for the unexpired fixed term period.”

I have been fighting with them for weeks to do this calculation for my breakage fee. They refused and now I’ve complained to the FSPO (though haven’t had any traction on that yet) they update this on their website.
I’ve also already paid the extortionate fee they were looking for in order to get onto a lower rate with ulster bank and start saving some money!
How long is it going to take me now to try and get some money back out of AIB!!

 

[NoRegretsCoyote]

I have been fighting with them for weeks to do this calculation for my breakage fee. They refused and now I’ve complained to the FSPO (though haven’t had any traction on that yet) they update this on their website.

AIB are obliged to send you a worked example on request.

BoI have done it for me on several occasions in the past.

The FSPO can be a tricky one to navigate. You need to demonstrate that you have had a final response in writing from AIB. Also, if AIB mentions an internal appeals process you are obliged to use this first before taking it to the FSPO.

 

[_ripped_off]

I asked AIB for the worked example. They based it on the difference in their retail fixed rates. I said not good enough should be market rates. They said that’s our final response you may now take it the ombudsman. (Brief summary) it’s now with the ombudsman, so I will have to wait out that process.

I guess I am just really annoyed and needed to rant! because I explicitly asked them (@RedOnion gave me the complaint template ) to do the calculation based on market rates and they refused and now they have updated their website saying they will do that. But I’ve already paid the breakage charge so I very much doubt AIB will entertain me at this stage they’ve made their money. I’ll have to wait for the FSPO to take care of it.

 

[NoRegretsCoyote]

I asked AIB for the worked example. They based it on the difference in their retail fixed rates. I said not good enough should be market rates. They said that’s our final response you may now take it the ombudsman. (Brief summary) it’s now with the ombudsman, so I will have to wait out that process.

Article 25 of the Mortgage Credit Directive says:

Member States may provide that the creditor is entitled to fair and objective compensation, where justified, for possible costs directly linked to the early repayment but shall not impose a sanction on the consumer. In that regard, the compensation shall not exceed the financial loss of the creditor.

To my mind the relevant reference rate is the interbank rate for the remainder of the term.

BoI specifically make reference to EURIBID.

 

[_ripped_off]

Thanks coyote ive spelled all of the above out to AIB and it formed the basis of my complaint to them and the FSPO.
I guess I would like to know now when did AIB add that updated wording about the 2nd calculation to their regulatory information.
Ultimately I hope it strengthens my complaint already open with FSPO.