Key Post AIB staff, ex-staff and the prevailing rate issue

As no one else has summarised this, I will do it based on the information I gleaned from the thread.

Corrections are welcome.

This is a complex issue with many variations. It is essential to keep this thread on topic. Any off-topic posts will be deleted. If you have a question which is not related to the core issue, start a new thread.

Could you also avoid repetitive posts such as "I am in the same position" or "How can they possibly justify what they are doing?" . I am trying to compile a summary which will help people understand the issue. It's more difficult for them if they have to trawl through repetitive posts and rants.

Summary

Most AIB Staff had two mortgage accounts.

• A staff preferential rate
• A non-preferential rate

These are two completely separate mortgages and are treated completely differently.

If you had a non-preferential rate, you are subject to the exact same treatment as any other customer.

• If you had Clause 3.2 in your contract and
• If you fixed your mortgage rate at any stage (either at the start or later on)
• If your fixed rate ended between October 2008 and 2013
• and If they did not offer you a tracker mortgage

You will have got the €1,615 and you will be getting the 12% write down and interest refund on your non-preferential rate mortgage

If you had a Staff Preferential Rate and moved to the Commercial Variable Rate and stayed on it, you are not in the Prevailing Rate cohort for this part of your mortgage.

AIB is claiming that the Prevailing Rate is a variable rate. And therefore Clause 3.2 did not apply. A few customers have made complaints to the Ombudsman on this issue. If the borrowers win, I would expect AIB to apply it to all staff.

If you had a Staff Preferential Rate and subsequently fixed at an ordinary non-preferential rate, you are in the Prevailing Rate Cohort
Again, you must meet the following criteria:

• You had Clause 3.2 in your contract and
• You fixed your mortgage rate at any stage (either at the start or later on) and
• Your fixed rate ended between October 2008 and 2013 and
• They did not offer you a tracker mortgage

You should have got the €1,615 and you should get the 12% write down and interest refund.

Nobody got €1,615 just because they were on the Staff Preferential Rate.
They got it because they subsequently fixed at a non-preferential rate.

I repeat. AIB denies that the Staff Preferential Rate was a fixed rate. Anyone who moved from that rate to an ordinary non-preferential variable rate is not in the cohort for this mortgage. If they got €1,615 it's because the other part of their mortgage qualifies.

Background:

AIB has agreed to pay redress to customers who meet all the following criteria:

1) They had Section 3.2 in their mortgage contract
3.2 FURTHER FIXED INTEREST RATE OPTIONS/CHOICE

At the end of any (my emphasis) fixed interest rate period, the Customer may choose between:

(a) a further fixed interest rate period, or

(b) conversion to a variable interest rate Mortgage Loan, or

(c) conversion to a tracker interest rate Mortgage Loan,

at the Bank's then prevailing rates appropriate to the Mortgage Loan. If the Customer does not exercise this choice, then the Mortgage Loan will automatically convert to a variable interest rate Mortgage Loan.

2) They fixed their mortgage rate for a period

3) They came off the fixed rate after October 2008 and before December 2013

4) They were not offered a tracker mortgage

You will not be included in this cohort if

1) You were not a customer of AIB .
This might seem obvious but EBS customers have asked if they are included - they are not.

2) You do not have Section 3.2 in your terms and conditions.
If you do not have Section 3.2 in your terms and conditions, you are not included and do not ask any questions in this thread. You may have a case based on other factors. But start a new thread.

3) If you were offered a tracker but did not avail of it, you are not in this cohort.

You should be included in the 5,907 cohort if you meet all of the following criteria:

1) You have Clause 3.2
2) You were on a Staff Preferential Rate
&
3) At some stage after coming off the Staff Preferential Rate, you fixed your mortgage for a period.

Clause 3.2 says: "At the end of any (my emphasis) fixed interest rate period".

So, if for example, you came off the Staff Preferential Rate onto a fixed rate, you would be in this cohort.
Or, if you came off the Staff Preferential Rate onto a normal Standard Variable Rate and later fixed for a period, you would be in this cohort.

If you are in this cohort, then you should have got €1,615 in early 2018.

This poster says he got €1,615 but has been told that he is not in the cohort. This does not make sense, so I suspect that either he or AIB is making an error.

If you went from the Staff Preferential Rate to a Standard Variable Rate and never subsequently fixed, then AIB is not including you in the cohort.

AIB is denying that the Staff Preferential Rate is a fixed rate loan.

They say that the title of the of the loan was "Variable Annuity"
They describe the rate as "static" but not fixed.


Now that the overall prevailing rate issue has been settled, the Ombudsman will have to decide whether the Staff Preferential Rate was a fixed rate within the meaning of Clause 3.2

It seems like a fairly simple question to answer. If the Ombudsman says that it was not a fixed rate, then these borrowers have no case. If the Ombudsman, says that it was a fixed rate, then it should follow that they will be added to the Prevailing Rate Cohort.

I have set out both sides of the argument later in this thread.

It is not enough to be included in the cohort of 5,907

Say, you were moved from the Preferential Rate to the SVR in January 2009 and fixed for 3 years in 2010.

If you ring AIB, you will be told that you are in the cohort because you fixed in 2010 and not because the Preferential Rate was a fixed rate.

However, the redress will be based on your mortgage balance as of 2013 when your fixed rate ended. And you will be paid interest on the redress from 2013 to 2020 - 7 years.

If you succeed in your case that the Preferential Rate was a fixed rate, then you would get redress from January 2009 when the mortgage balance was higher and you would get interest paid on that higher redress from 2009 to 2020 - 11 years.

So don't be satisfied with being included in the cohort. It's good but it could be a lot better.

Brendan

The complication of split mortgages

1) 80% Staff Preferential Rate; 20% Tracker

You should regard this as two separate mortgages. The above analysis applies to the 80% bit.

If you ring AIB, you will be told that you are not included.

2) 80% Staff Preferential Rate; 20% fixed rate

Again, this should be considered to be two separate mortgages.
AIB will say that the 80% is not included in the cohort, but that the 20% fixed rate bit is.

This probably explains the confusion where people who got €1,615 have been told that they are not included.

Your status as a staff member or ex-staff member should not be relevant

The decision as to whether you are included or not, will be determined by the type of product you have. Of course, if you had not been a staff member, you would not have been on the Staff Preferential Rate.

But if you are a staff member, and you fixed in the ordinary way, you would be included.

Brendan

The mass move of staff to the SVR


In January 2009, AIB switched all their staff from the Staff Preferential Rate to the SVR, unless the employee asked not to be transferred.




I am not sure that this is very relevant. As an employee, I would argue that this meets the terms of ""At the end of any fixed interest period, the Customer may choose between: "

and that AIB should have included a tracker at the prevailing rate in the list of options.

The Ombudsman might or might not see it like that.

Why AIB says the Staff Preferential Rate was not a fixed rate

I have not seen AIB's argument. Could anyone who has a letter from AIB explaining why the staff preferential rate is not a fixed rate email me a copy of the letter. My email address is brendan at this website.



The counter arguments as to why it was a fixed rate

1) The Application Form is very clear that the rate is fixed for the term of the mortgage or the duration of the person's employment with AIB


The same section also says:

But the interest rate can only increase if the borrower leaves the bank and is no longer entitled to this product.


1) The terms are very clear " a staff preferential Fixed Home Loan interest rate of 3% will apply to the Mortgage loan"
2) Section J European Communities Regulations section says: "Hopeflex is a preferential home loan ...at a fixed interest rate, at present 3%."
It then goes on to say "Home Mortgage Loans are fixed or variable interst rate loans for any purpose at the published AIB Home Mortgage Rates" So in the very next line they are distinguishing between the Homeflex product and the the ordinary Home Mortgage Loan product. The first is fixed. The second can be fixed or variable.
3) While AIB constantly changed its SVR in line with the market, the preferential rate never changed from 3%. In fact, some customers who moved off the product moved back to it and were still charged 3% irrespective of what happened to mortgage rates generally.
4) There are many conditions in the contract referring to a fixed interest rate e.g. early breakage fees. These should not be in a contract referring to a variable rate loan.
5) The terms make it clear that while it is a fixed interest loan, it will be exempt from the early breakage costs.
The fixed interest rate early breakage cost referred to in Clause 3.3 of the General Terms & Conditions will not apply if for any reason the interest rate applicable to the Mortgage Loan ceases to the Staff Preferential Fixed Home Loan Interest Rate”.
There would be no need to make such an exemption for a variable rate loan. The Consumer Credit Act prohibits early repayment penalties on variable rate loans.
6) If it were a variable rate loan, the contract would specify the conditions under which the rate would be varied.
7) The product was set up on AIB's computer system as a fixed rate. ( I personally wouldn't make this argument as it's not very relevant.)

If it walks like a duck, swims like a duck and quacks like a duck, it's probably a duck.

8) While it's very clear that this was a fixed rate loan, if there is any ambiguity in the terms and conditions, or if there is any conflict between the terms, the doctrine of contra proferentem must apply and the contract should be interpreted in favour of the borrower.

Did the terms and conditions say anything about moving from the rate of 3% if general interest rates changed?

Thanks for all those images.

Track - could you post an image of Part 1 of your Letter of Offer as referred to in the following:



The following is an example of Part 1 which a non-staff member received.

It sets out the term, the loan time, the rate, and the amount of each instalment.

Could someone either post this or email it to me.

Thanks

Hi Track

That is great thank you.

Clearly, what AIB did is that they took the contract for an SVR and cut and pasted it into a new document to create a new contract for the HomeFlex product.

The reference to Loan Type as "Variable Annuity" is clearly a careless typo. It's a fixed rate contract. Just as the reference to margin as 0% is careless. The margin would be correct for a tracker mortgage but has no relevance to a fixed rate mortgage.

I think that the many references to fixed rate throughout the document and the fact that the fixed rate did not change and has never changed far outweigh that careless typo. of referring to it as a "variable annuity".

By the way, I am not really sure that many people, even those working in AIB, would know what the word "annuity" means in this context.

Brendan

Brendan Burgess said:

As no one else has summarised this, I will do it based on the information I gleaned from the thread.

Corrections are welcome.

This is a complex issue with many variations. It is essential to keep this thread on topic. Any off-topic posts will be deleted. If you have a question which is not related to the core issue, start a new thread.

Could you also avoid repetitive posts such as "I am in the same position" or "How can they possibly justify what they are doing?" . I am trying to compile a summary which will help people understand the issue. It's more difficult for them if they have to trawl through repetitive posts and rants.

Click to expand...

Hi Brendan,
I've just discovered these threads on the Tracker stuff today and its amazing! thank you so much for all your hard work! I'm in the same boat with having the staff preferential rate saying it wasn't truely a fixed rate but was fixed annuity. They did pay out on the remainder of the mortgage however. Was there any further update on this particular aspect ? so if I wanted to challenge whether my staff preferential rate was really fixed is there a current case on this awaiting outcome? or would I have to find a solicitor on this? thanks again

There are a few cases at advanced stages with the Ombudsman.

they could be 6 months to a year from a decision.

But I think you have to wait.

Brendan

Brendan Burgess said:

There are a few cases at advanced stages with the Ombudsman.

they could be 6 months to a year from a decision.

But I think you have to wait.

Brendan

Click to expand...

Thanks for that Brendan , much appreciated

I have not heard of any progress on these cases.

But it has been reported elsewhere that there it takes 12 to 18 months for a decision.

I don't think that there is any point in going to the hassle of making a complaint now. You will be dragged by the Ombudsman through the mediation process. Then you will engage for ages in meaningless exchanges with AIB via the Ombudsman. Then when that is over, you will be told that it will take 12 months for a decision to issue.

Brendan

There is another thread covering off another bit on this “AIB staff getting €1650 compensation” people here were asking here why the staff account got no refund, and their other account did. Brendan said the fspo cases have moved to adjucation stage. He is progressing 2 cases for people. I’m not familiar with how long more it will be after that. Very Closely watching this for an outcome.