AIB AIB's comments on Prevailing Rate cohort in their Annual Report

Something very small but very important in the release to my mind is calling out the "06-09 T's & C's". I don't know if the bank has been so explicate to date in identifying the Grouping publically, maybe they have but anyone who had a doubt in their mind whether they were in line or not in line for recompense might be a little bit wiser today.

Also, you don't casually throw in a potential fine of €35mn into the mix without being certain that that is going to be paid either. Re the general wording, that is just business speak, it would be seldom any organisation would throw a major mae culpa into an annual report if they could talk in circles around it which is what AIB have done. So all told, it is a positive statement for the prevailing rate cohort today (without being absolute certain of the final outcome).

Shout out to Brendan once again for bringing this so far. As you read some of the other threads on tracker mortgages, to see Brendan appearing in the early 2000's on the side of the consumer on this matter, it is mind boggling to be still there 15/20 years later rattling the cages of banks and helping thousands of people (most of which don't even know what could be around the corner in a positive sense).
 
Megafan said:
Would mortgage interest relief come into play also? Could the revenue seek to claim back taxes on that relief I wonder.
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Sorry thats what I meant by TRS I believe they are due redress too!

SadieG83 said:
So what happens next? How long do we wait for another decision etc??
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We're still waiting for the Ombudsman to publish his decission in relation to the Prevailing Rate case so there is no fixed time line on that. Mr Hunt did say he wanted to put legacy issues behind him so the hope is AIB will move quickly to get this closed out but no one can say with any certainty what will happen and when.
 
Megafan said:
I don't know if the bank has been so explicate to date in identifying the Grouping publically
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An interesting point. I have always thought of them as the €1,615 group. If you got the letter, you are included.

If you have Clause 3.2, you are included.

There was some argument that "everyone knew that AIB had withdrawn trackers in October 2008, so anyone who drew down a mortgage after that had a weak case.". I never understood that argument. If someone had clause 3.2 in their contract, it did not matter if they drew down their mortgage in 2007 or 2009.

Brendan
 
Hi Brendan.

Are you saying that some of the people who received 1615 may not be included? Or you mean that all those as well as others may be included?
I.e. is the 1615 a subset ? Or those included will just be a subset of the 1615 gang?
 
No, I am saying that anyone with Clause 3.2 is included. That the date is irrelevant as some others have argued.

The clause 3.2 group should be the same as the €1,615 group or as they are now known the ‘06-09 Ts & Cs who never had a tracker and proud’ cohort.

Brendan
 
Sorry can I just clarify so anyone who got the letter and cheque of €1615 is included as I don't know if 3.2 is included or not. Sorry for the confusion.
 
Brendan Burgess said:
An interesting point. I have always thought of them as the €1,615 group. If you got the letter, you are included.

If you have Clause 3.2, you are included.

There was some argument that "everyone knew that AIB had withdrawn trackers in October 2008, so anyone who drew down a mortgage after that had a weak case.". I never understood that argument. If someone had clause 3.2 in their contract, it did not matter if they drew down their mortgage in 2007 or 2009.

Brendan
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Agreed. Retrospectively though.

A lot of people, ourselves included either picked fixed or variable after our initial fixed period accepting the trackers are gone argument and never referred to the actual clauses entitling us one. It was 2017 when AIB first offered us a tracker rate but it wasn't realistic to accept it. We have the prospect of a tracker now based on the pro-activity of others, it is as simple as that.

On one of the early correspondences from AIB they noted the offered us a tracker in 2017 having re-introduced them in 2013. In our reply, we simply asked why they waited 4 years to note this but it all went into the BDO black hole after that (latest update from BDO was yesterday, no change).

I always found the arguments put forward here when we were all appealing to the panel compelling and realistic and in fairness we were paying 3.8% to 4.25% interest a lot of the time when the ECB rate was zero so in retrospect, know AIB took us all for a ride on the rate issue and hope they get what they deserve.

That said, we are absolutely lucky to find ourselves in this position because there are tens of thousands of people who aren't.

I don't think AIB have a leg to stand on to fight this because the Ombudsman is creating a precedent that assumedly AIB have to apply across the board but it doesn't mean AIB will just give up on the argument (I hope they do!).
 
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I see that AIB share price has dropped almost 30% since the 4th Feb announcement of the EUR 300 million provision - not sure how much of this is related to COVID19 or just the tracker provision alone.
 
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robertpender said:
I see that AIB share price has dropped almost 30% since the 4th Feb announcement of the EUR 300 million provision - not sure how much of this is related to COVID19 or just the tracker provision alone.
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Things are very quiet around these parts this week after a flurry of activity last week. COVID19 could have repercussions on how the next stages are dealt with, who knows how it will kick off over the next weeks.

From an AIB perspective, I expect in reality they would like to dealt with to completion sooner rather than later. If we took the €265mn as a 10 year impact less say €40mn in expenses, notwithstanding the annual impacts of rates and very basic (and incorrect) maths, this could cost them upwards of €22mn in 2020 and annually beyond also since the ECB rate probably won't move and people are locking into whatever interest rate they are paying presently. If they went to the High Court, how long would it take to go to trial etc, could the result be worse against the bank. It is a tight rope walk for AIB.
 
Out of curiosity,is there any downside in AIB taking it to the high court? Might be a bit of reputational damage. But people forget as time goes on anyway. On the upside they could save themselves 300 million. Anyone here know the biggest downside in AIB challenging?
 
zxcvbnm said:
Out of curiosity,is there any downside in AIB taking it to the high court? Might be a bit of reputational damage. But people forget as time goes on anyway. On the upside they could save themselves 300 million. Anyone here know the biggest downside in AIB challenging?
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Some time back a poster suggested if AIB lost the case in the High Court, then it was possible that the ultimate sanction was to write off the mortgage since AIB weren't honouring a specific T&C, which would be favourable to the customer and continued to deny that customer the right to same. I have no idea if that was based in reality or not, I don't know if that is a stretch or not but it might be a risk.

Seeing as the preliminary ruling from the Ombudsman isn't public, we have no line of sight on compensation over and above refund of recharge. The courts if they found similarly could certainly award higher compensation for nuisance also. I actually don't even know who the bank would challenge in court? Is it a point of principle that they get the court to adjudicate on, I have no idea.

Plus what precedent does it set. I don't know if a bank has taken a FSPO ruling to a court, they would really need to have their ducks in a row.

Also, just another random thought, given the state owns 72% of AIB, notwithstanding the bank making their board happy with the provision, seeing as the ombudsman is an arm of the state really, would the Government have had a word in the ear of the bank on this.

So many questions!
 
Megafan said:
if AIB lost the case in the High Court, then it was possible that the ultimate sanction was to write off the mortgage
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If someone suggested that on Askaboutmoney, then I would have deleted it. It's absolute nonsense. It's Freeman type stuff and has no place in a serious forum.

Brendan
 
It's very hard to predict what any bank would do. And I do not want to speculate about AIB as I am involved in the case.

But the downsides to a lender challenging the Ombudsman are
  1. Continued uncertainty for a few years. The Stock Market can live with a specific cost. It's written off and becomes history. But they would be very worried about a legal case with an unquantifiable outcome.
  2. The High Court does not make an award. The judge would just set aside the decision of the Ombudsman and tell him to review his decision along the following lines.... So, in theory, the Ombudsman could review the decision and make a bigger award against the bank.
  3. It was ptsb's appeal to the High Court and then the Supreme Court which finally prodded the Central Bank to take action. I would imagine that the Central Bank would frown upon any bank challenging the Ombudsman's decision. And when they stop frowning, they would probably remind the bank's executives that any promotions or more senior jobs in other banks would be subject to the Central Bank's Fitness and Probity regime. They would be very brave to ignore that.
  4. The reputational damage is big. They are dragging it out for years.
Either the borrower or the lender can challenge the Ombudsman's decision. But the bar is very high as I have set out in this post:

Key Post - Appealing an Ombudsman's decision to the High Court

In a case today, of Alan and Deirdre Grant vs. Permanent TSB with the Ombudsman as notice party, Justice Hedigan set down the basis on which the High Court would overturn the Ombudsman's decision. I think that this is a very clear setting out of the approach. In summary - unless the Ombudsman's...
www.askaboutmoney.com

Finnegan P. in Ulster Bank v. Financial Services Ombudsman & Drs. [2006J IEHC 323:

"To succeed on this appeal the Plaintiff must establish as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors.
 
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Will the public be told if AIB challenge the Ombudsman's preliminary decision? Do we know when (and if) the Ombudsman's final decision will be made public?
 
Brendan Burgess said:
It's very hard to predict what any bank would do. And I do not want to speculate about AIB as I am involved in the case.

But the downsides to a lender challenging the Ombudsman are
  1. Continued uncertainty for a few years. The Stock Market can live with a specific cost. It's written off and becomes history. But they would be very worried about a legal case with an unquantifiable outcome.
  2. The High Court does not make an award. The judge would just set aside the decision of the Ombudsman and tell him to review his decision along the following lines.... So, in theory, the Ombudsman could review the decision and make a bigger award against the bank.
  3. It was ptsb's appeal to the High Court and then the Supreme Court which finally prodded the Central Bank to take action. I would imagine that the Central Bank would frown upon any bank challenging the Ombudsman's decision. And when they stop frowning, they would probably remind the bank's executives that any promotions or more senior jobs in other banks would be subject to the Central Bank's Fitness and Probity regime. They would be very brave to ignore that.
  4. The reputational damage is big. They are dragging it out for years.
Either the borrower or the lender can challenge the Ombudsman's decision. But the bar is very high as I have set out in this post:

Key Post - Appealing an Ombudsman's decision to the High Court

In a case today, of Alan and Deirdre Grant vs. Permanent TSB with the Ombudsman as notice party, Justice Hedigan set down the basis on which the High Court would overturn the Ombudsman's decision. I think that this is a very clear setting out of the approach. In summary - unless the Ombudsman's...
www.askaboutmoney.com

Finnegan P. in Ulster Bank v. Financial Services Ombudsman & Drs. [2006J IEHC 323:

"To succeed on this appeal the Plaintiff must establish as a matter of probability that, taking the adjudicative process as a whole, the decision reached was vitiated by a serious and significant error or a series of such errors.
Click to expand...

You will probably tell me there has been a book written about the tracker scandal but there is a book in the tracker scandal! Point 3 is fascinating that the banks in effect brought this upon themselves. Hubris seems their downfall.
 
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