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

Hi,

I just came across the thread on AIB preferential mortgages and I appreciate we are still waiting on a response from the ombudsman.

Just on a slight nuance, which i'm wondering has anyone else experienced? I took out a split mortgage in 2005 homeflex and standard variable. The product I received meant that while I was on a variable rate my payments were fixed for both mortgages. For years staff business were trying to get me off the product and sent me numerous letters saying I need to move to variable and my repayments would be less. No mention of tracker to my recollection..

Have you heard of this scenario before re AIB staff mortgages. Any implications for tracker redress?

regards
Kevin
 
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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...
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It sets out the criteria. The fixing or otherwise of the payment is irrelevant. If you had a fixed rate and you had the relevant clause in your contract saying you would be offered a tracker, you should have got redress. But it doesn't appear that you had that.

If you had the staff preferential rate, then you just have to wait for the Ombudsman to make a decision on the lead cases.

Brendan
 
Interesting comments from the Central Bank report today. Page 12

Customers seeking changes to their mortgage accounts such as amalgamating their loans and
even basic adjustments such as changing to “interest only” repayments for a short period of time,
resulted in customers being charged an incorrect rate of interest. These failings were
particularly prevalent in AIB’s Staff Business Unit, which operated on a wholly manual basis for
an extended period of time. The financial burden brought by the resulting overcharging to AIB’s
own employees holding over 600 staff business mortgage accounts lasted from May 2006 until
the last customer had their correct tracker rate restored in January 2018.
 
Hi Brendan, I'm currently awaiting the decision from the ombudsman on this issue as I had a preferential rate staff mortgage. With rates increasing I'm considering fixing my interest rate now but if the ombudsman should rule in our favour and the Bank are instructed to offer a tracker rate, do you think I would be penalised to break out of the fixed rate? Thanks
 
1) If the Ombudsman upholds the complaint, I would expect that you will be given the same terms as the Prevailing Rate Cohort i.e. a 12% write down and interest paid on the write down up to today's date.

2) So I would not expect the Ombudsman to direct that you be put on a tracker. In the unlikely event that he does, it would probably be at a margin of 1.5% , so you are probably better fixing anyway.

So make your decision on whether to fix or not based on the current rates and not on what the Ombudsman might do.

If the Ombudsman upholds the complaint, you will be so pleased, that you won't mind if you face a minor loss through fixing.

Brendan
 
Brendan Burgess said:
1) If the Ombudsman upholds the complaint, I would expect that you will be given the same terms as the Prevailing Rate Cohort i.e. a 12% write down and interest paid on the write down up to today's date.

2) So I would not expect the Ombudsman to direct that you be put on a tracker. In the unlikely event that he does, it would probably be at a margin of 1.5% , so you are probably better fixing anyway.

So make your decision on whether to fix or not based on the current rates and not on what the Ombudsman might do.

If the Ombudsman upholds the complaint, you will be so pleased, that you won't mind if you face a minor loss through fixing.

Brendan
Click to expand...
Hi Brendan, would I be right in thinking that the loss through fixing that you refer to is that the repayment amount would be higher if we fix now v the repayment amount if the mtg is written down 12% and repayments are adjusted in line with the balance? In this case, if we repay at a higher amount than required, would that not ultimately result in the term reducing? Or is there something else? Thanks
 
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Brendan Burgess said:
If the Ombudsman upholds the complaint, you will be so pleased, that you won't mind if you face a minor loss through fixing.
Click to expand...

No you are making it way too complicated.

If you fix your mortgage rate, you may win or you may lose depending on what happens mortgage rates in future.

But my point is that if the Ombudsman upholds the complaint, the amount of redress will be very large in relation to the gain or loss from fixing. So if you make the "wrong" decision now, it won't matter.

To illustrate.

Say the balance on your preferential rate part of the mortgage was €190k 14 years ago when you switched to variable.
If the Ombudsman upholds your case, you will get about €34k between a write-down and a refund of interest.
Your mortgage today is about €120k. So getting the decision on fixing "wrong" might cost you 1% of €120k for 5 years, or €6k.



But the two are not connected. So make your decision to fix or not assuming that you are not waiting for an Ombudsman's decision.

Brendan
 
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Hi Brendan,

In relation to the above, it would only be the preferential rate part of the mortgage that gets the refund. I would think. And this amount was capped for staff at €190k. That is why staff loans were split into 2. Preferential rate terms and conditions for one part.

The complaint is that the preferential rate of 3.00% is a fixed rate.

Just in case people start thinking they would get a refund of more and on the full amount.,

I’d imagine if u were on a fixed rate on the other part of your mortgage, depending on your Terms and conditions you already got a refund and if you got no refund then you never had a fixed rate on the other part again all depending what terms and conditions you have .

Would I be correct in thinking this?
 
Hi Zero

Good point. I have changed the example to €190k.

And yes, the preferential part of the loan is separate from the other part.

Brendan
 
Zero123 said:
Hi Brendan,

In relation to the above, it would only be the preferential rate part of the mortgage that gets the refund. I would think. And this amount was capped for staff at €190k. That is why staff loans were split into 2. Preferential rate terms and conditions for one part.

The complaint is that the preferential rate of 3.00% is a fixed rate.

Just in case people start thinking they would get a refund of more and on the full amount.,

I’d imagine if u were on a fixed rate on the other part of your mortgage, depending on your Terms and conditions you already got a refund and if you got no refund then you never had a fixed rate on the other part again all depending what terms and conditions you have .

Would I be correct in thinking this?
Click to expand...
Also, if the preferential staff rate portion of the mortgage was fixed for any period of time after 2009 (for example in my case, fixed for 2 years in 2012), a refund/write down would already have been applied as part of the prevailing rate cohort, therefore I would imagine the refund/write down would only apply from years 2009-2014 (date of conversion to variable rate from staff preferential rate to date of fixed rate ending)?
 
I’m not sure with the above, as the conversion to the variable rate at that time was the best rate, That conversion was Global swap rate. I think it was earlier than 2014.

They moved anyone on the staff preferential rate 3.00% to the standard variable rate 3.25%.

In the banks eyes….This rate change was
“Staff preferential variable rate” to “ standard variable rate”.
In the customers eyes…..This rate change was “Staff preferential fixed rate” and moved to “ standard variable rate”.


The rate increased but BIK was removed so was better for the customer seemingly, if you ask them now about BIK they say they can’t discuss because they don’t know a persons tax situation.


I think the preferential piece will be treated the same as the cohort who first received the €1600 payment and eventually won that case after. 5900 customers.

The were not offered a tracker rate when they came off a fixed rate. Even thought the tracker rate for them would have been higher. It was the mistake of not offering the rate which was available at the time was the issue. They can avail of the prevailing tracker rate now, but it isn’t the best rate.

People on a preferential rate always thought this was a fixed rate and believed it was the best rate (preferential) and it was neither of these.

How they will make a decision on what kind of payment to give, if the case is upheld, I’m not sure, but I feel it should be the same as the 5900 customers.

Maybe someone else on here might know more and know a deadline for these cases, the process seems so long at this stage. Almost 4-6years.
 
In my situation, I was on a tracker rate with margin 0.6% and applied to staff mortgages to fix my mortgage rate. On the application form I selected the "fixed" option and was given the staff preferential fixed rate. Obviously in 2009 when the mass conversion took place, I was never offered the tracker rate back. If I was any other customer (non staff) who went from tracker to fixed and subsequently were not offered a tracker rate at the end of the fixed rate period, I would have had my tracker restored under the tracker mortgage redress. I don't see why staff should be treated differently, in my opinion, if staff had a tracker rate and fixed via staff preferential fixed rate, then we should also have our tracker rate reinstated if the Ombudsman case is upheld
 
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Have u appealed this?
Do u know what the fixed rate was when u selected that fixed option at that time?when did u select fixed? I am just wondering was it higher than the staff rate.
 
Zero123 said:
Have u appealed this?
Do u know what the fixed rate was when u selected that fixed option at that time?when did u select fixed? I am just wondering was it higher than the staff rate.
Click to expand...
Yes I complained and appealed this several times with the Bank but their reply was firmly that the preferential rate was not a fixed rate product - despite it being referred to as a fixed rate on several sections of the staff mortgage application form. The staff business app form only gave 3 rate options: "Tracker, Variable and Fixed". I selected fixed and was offered staff preferential rate 3% in late 2007- I'm not sure if staff business offered any other fixed rate options at the time nor do I know what fixed rates were for non staff at that time. The advice I was given when I enquired off the mortgage advisor about fixed rates was to apply to staff business for the staff preferential fixed rate. Our argument is that the staff preferential rate was a fixed rate therefore I'm eagerly awaiting the ombudsman's decision.
 
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These "Are we there yet?" posts are very very annoying.

What sort of answer do you expect? "Oh yeah. We won the case last year, but forgot to tell you" ?

If anyone has an update, post it.

Other than that, wait.

Brendan
 
Hi Brendan, I went to my local Citizen Information Centre & the receptionist booked an appointment with a Solicitor. The receptionist told me that they had Solicitors from legal aid who would be happy to talk to me. She was able to get me a Solicitor who was familiar with Mortgages.

Anyway, I met with a Solicitor ( in person) and talked through my complaint. I told her I had received the 12% write down of my staff mortgage resulting in a €11,432 reduction on my mortgage. At our 2nd meeting she told me I should be queuing my CCR with AIB to see how AIB reported the 12% reduction in my mortgage to the CCR. She also said it’s fair to say that AIB have reported my mortgage balance 12% higher than it should have been over a number of years. If in that time another lender had run a check they would have seen I owed c€140k when this should have been less by €11,432. She said the FSPO don’t like to see complaints about CCR and if they do uphold the complaint they usually award anything from €5k to € 7k.

Has anyone queried this with AIB? Or am I wasting my time.
 
Hi Brendan, I read the following ombudsman decision this evening. 2023-0009

From reading this, would you take that the ombudsman is not viewing the staff preferential mortgage as a fixed rate product or is this decision only applicable to this case? Understand that this may not relate to AIB Bank staff mortgages.

Thanks
 
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Hi,
I think it is different because In the AIB’s T&Cs &LOO they called the staff preferential rate, “staff preferential fixed rate” and the T&C’s seem to read very different to the case above.
They have however said in the case decision there that it is a fixed term not a fixed rate, but it looks like that was called out somewhere to them. I can’t recollect AIB ever advising that the staff preferential fixed rate was in fact a fixed term, not a fixed rate.
 
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