Break fee for some borrowers was wrongly calculated by KBC

[Mort.Switcher22]

I am compiling a dossier to send to them.

Brendan

Thanks Brendan, but if you were hoping to switch to Avant or ICS in January when their rates were very competitive and held off on the switch as break fee away too high as per KBC calculations are you not entitled to redress aswell..only winner here is KBC as we refixed with them at 2.4 rather than the 1.95 on offer?

 

[Brendan Burgess]

3) If you were thinking of switching to Avant or some other lender but didn't do so because you were quoted the wrong break fee, then you are entitled to redress. The calculation of this redress will be complicated. They should match the rate you could have got on the date you applied for the fixed rate break fee.

if you were hoping to switch to Avant or ICS in January when their rates were very competitive and held off on the switch as break fee away too high as per KBC calculations

Yes, that is covered in point 3. In case it was not clear, I have rephrased it.

Brendan

 

[Mort.Switcher22]

Thanks Brendan, really appreciate your assistance on the above

 

[lovely job]

I got a letter saying that I had the wrong break fee applied and would be getting a refund. It was unprompted.

But my break fee was tiny- maybe €100 and I got €9 back.

 

[Paul F]

Based on the timeline of posts earlier in this thread, and also based on looking at the history of this swap rate, I suspect that the following cohort were given an incorrect break fee quote:

• Some or all KBC mortgage customers who requested a break fee quote between about the beginning of February 2022 and about the end of April 2022
  • It's possible that the issue started as early as the beginning of January 2022, or even late 2021

Those with a relatively long time left on their fixed rate and/or those with a large mortgage balance were probably worst affected by the mistake.

3) If you were thinking of switching to Avant or some other lender but didn't do so because you were quoted the wrong break fee, then you are entitled to redress. The calculation of this redress will be complicated. They should match the rate you could have got on the date you applied for the fixed rate break fee.

KBC customers who were thinking of switching to Avant or Finance Ireland but didn't because they were put off by the incorrect break fee could also make the case that they missed out on the €1,500 switching contribution that Avant and Finance Ireland were offering (up to the end of March 2022 in both cases).

 

[Brendan Burgess]

Charlie Weston has covered it in today's paper

KBC Bank Ireland overcharged homeowners who switched their mortgages

Departing bank KBC has admitted it overcharged mortgage customers who switched to another lender on break fees. It has now paid the affected customers compensation.

www.independent.ie

Consumer campaigner Brendan Burgess said: “A lot of people who wanted to switch from KBC were given the wrong break fee and then decided not to switch, so they have lost out a lot as rates have gone up since.”

KBC Bank said 166 mortgage accounts where people broke out of a fixed rate and switched were affected by the error.

However, Mr Burgess said: “The big issue is how many people were given wrong quotes and as a result chose not to switch when the rates were much lower.”

But it's not just people switching from KBC. It's also people who wanted to break a fixed rate with KBC and refix. Although, if they have not increased their fixed rates, this might not matter so much.

Brendan

 

[Mort.Switcher22]

Hi Brendan, thanks a mil that's great to see it getting abit of traction. I've decided going to write a letter to seek redress as the mistake from their end prevented us from switching to Avant / ICS during Q1 when the rate offered was 1.95 for fixed period over 5-7 yrs. We fully intended to switch to the lower rates been offered but the break fee deterred us. Thanks again!

 

[Paul F]

I've decided going to write a letter to seek redress as the mistake from their end prevented us from switching to Avant / ICS during Q1 when the rate offered was 1.95 for fixed period over 5-7 yrs. We fully intended to switch to the lower rates been offered but the break fee deterred us.

You also missed out on the €1,500 switching contribution that Avant and Finance Ireland were offering (up to the end of March 2022 in both cases). You should claim for that as part of the redress.

Not only did you miss out on the 1.95% rate with Avant, the mistake also means that you are now not a customer of Avant's. What I mean is that you have missed out on the savings from the 1.95% rate but you will probably also miss out on future savings (after 5 or 7 years from now) – if we assume that Avant's rates remain lower than Bank of Ireland's. You should also claim for that.

KBC might argue that you can switch to another lender in the future but there is no guarantee that you will be able to.

 

[Mort.Switcher22]

You also missed out on the €1,500 switching contribution that Avant and Finance Ireland were offering (up to the end of March 2022 in both cases). You should claim for that as part of the redress.

Not only did you miss out on the 1.95% rate with Avant, the mistake also means that you are now not a customer of Avant's. What I mean is that you have missed out on the savings from the 1.95% rate but you will probably also miss out on future savings (after 5 or 7 years from now) – if we assume that Avant's rates remain lower than Bank of Ireland's. You should also claim for that.

KBC might argue that you can switch to another lender in the future but there is no guarantee that you will be able to.

Thanks Paul, will definitely include the 1500 lost switcher savings aswell in the redress, was always planning to switch lock into the 5/ 7 year fixed at the 1.95. I did a quick calculation over 5 yrs and cost us around 7k just looking at the difference between the 1.95 and the 2.4 over 5 yrs. Thanks

 

[Paul F]

I did a quick calculation over 5 yrs and cost us around 7k just looking at the difference between the 1.95 and the 2.4 over 5 yrs.

I get 251000*5*0.45%, which is about €5,500.

The €1,500 would go on top of that, but KBC could argue that it would have cost you about €1,500 to switch, so it's back down to about €5,500.

But then there are Avant's future rates that you are not going to get, and it's not hard to imagine that they will be lower than BOI's.

 

[Paul F]

Thanks Paul, will definitely include the 1500 lost switcher savings aswell in the redress, was always planning to switch lock into the 5/ 7 year fixed at the 1.95. I did a quick calculation over 5 yrs and cost us around 7k just looking at the difference between the 1.95 and the 2.4 over 5 yrs. Thanks

@Mort.Switcher22 After thinking about this some more, I feel like nothing less than the following would amount to fair redress:

• KBC should, with your agreement, put you on a 1.95% fixed rate now (with about 6.5 years left to run on the fixed period)
• They should compensate you to the tune of the amount of extra interest you have paid over the last 6 months or so, plus the €1,500 switching contribution that Avant were offering (but minus the fees you would have had to pay for switching)
• They (and Bank of Ireland when they take over your mortgage) should offer you the fixed rates that Avant offer – from now until the very end of your mortgage term
• They should also offer you all of the other benefits that Avant mortgage customers get (large overpayments without penalty, the waiving of break fees if you trade up, etc.)

This type of redress would mean that it were as if you had made the switch to Avant earlier in the year, and you would not miss out on any of the associated benefits over the coming years.

 

[Brendan Burgess]

We fully intended to switch to the lower rates been offered but the break fee deterred us. Thanks again!

Have you any evidence that you intended to switch to another lender?

For example, did you apply to or get approval from Avant?

Or, did you just want to break and refix with KBC?

That will really determine the redress you are due.

Brendan

 

[Brendan Burgess]

Hi, I had the same issue with KBC break fee, was quoted 530 in Jan bit since then it was slowly coming down but then started to rise again. I decided to break out at 690 around the 20th of April. I'M still not convinced I was right to break out and pay but at the time it did not make sense fee goin back up?

So you broke out in April. Did you refix with KBC or did you switch to another lender?

Avant did not increase their rates until May.

It seems to me that you potential claim is just the interest overpaid between January and April.

Brendan

 

[Mort.Switcher22]

@Mort.Switcher22 After thinking about this some more, I feel like nothing less than the following would amount to fair redress:

• KBC should, with your agreement, put you on a 1.95% fixed rate now (with about 6.5 years left to run on the fixed period)
• They should compensate you to the tune of the amount of extra interest you have paid over the last 6 months or so, plus the €1,500 switching contribution that Avant were offering (but minus the fees you would have had to pay for switching)
• They (and Bank of Ireland when they take over your mortgage) should offer you the fixed rates that Avant offer – from now until the very end of your mortgage term
• They should also offer you all of the other benefits that Avant mortgage customers get (large overpayments without penalty, the waiving of break fees if you trade up, etc.)

This type of redress would mean that it were as if you had made the switch to Avant earlier in the year, and you would not miss out on any of the associated benefits over the coming years.

@Paul F, thanks so much for the very detailed response above. You are so right, redress to be fair means putting a person in the same position as if we had gone ahead with the switch at the time. We should be put on the 1.95% over the 6.5 yrs. I will be writing to KBC this week seeking the above redress. Thank you!

 

[Brendan Burgess]

What did you actually do when you broke out of the fixed rate in April?

Brendan

 

[Mort.Switcher22]

What did you actually do when you broke out of the fixed rate in April?

Brendan

I refixed with KBC for 5 years at 2.4%, was holding out to breakout waiting for the breakout fee to improve but felt time was running out as feared rate increases

 

[Brendan Burgess]

Kbc fixed 5 yrs at 2.6 in June 19

I refixed with KBC for 5 years at 2.4%,

So you paid 0.2% more than you should have from January to April

So your compensation should be €290k @ 0.2% p.a. for 3 months or €145 + the excess charge.

Brendan

 

[Mort.Switcher22]

So you paid 0.2% more than you should have from January to April

So your compensation should be €290k @ 0.2% p.a. for 3 months or €145 + the excess charge.

Brendan

Thanks Brendan, assuming the .2 above is the difference between KBC 2.6 down to 2.4? this would be at 250k.

 

[Mort.Switcher22]

Thanks Brendan, assuming the .2 above is the difference between KBC 2.6 down to 2.4? this would be at 250k.

@Brendan,just to clarify I am seeking full redress from KBC to compensate us for the rate we should be on now of 1.95 v 2.4 for the next 5 yrs..the .2 above is only a very small part of the compensation. Back in Jan- Apr I rang KBC every week looking for an updated break out fee, our intention was to leave KBC and move to a better fixed rate been offered, we only refixed with KBC as time was running out- ICS already increased 5 yr fixed to 2.45 in March.

 

[Mort.Switcher22]

@Brendan,just to clarify I am seeking full redress from KBC to compensate us for the rate we should be on now of 1.95 v 2.4 for the next 5 yrs..the .2 above is only a very small part of the compensation. Back in Jan- Apr I rang KBC every week looking for an updated break out fee, our intention was to leave KBC and move to a better fixed rate been offered, we only refixed with KBC as time was running out- ICS already increased 5 yr fixed to 2.45 in March.

Sorry Brendan, would u agree with the above? Thanks