AIB How is AIB calculating the interest on the 12%?

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To be fair to the Agent, they are told what to say. The error, or else the decision to calculate it this way, is only theirs to communicate.

I wonder if they made an active choice on this at a meeting, and if they did, what the discussion sounded like. Hard to understand how even the most superficial discussion would end up with the decision that the right way to do it is to calculate using simple interest.
 
You can bet your life they made an active choice to use simple interest, however as BB has said, the Ombudsman instructed them to repay the interest that you paid on the 12% so cannot see them getting away with this one, as I said before the mind boggles at what is going on in that Bank.
 
So they'll be doing an interest refund on the refund of interest?? You're right October2019, the mind boggles.. You would think that they would have followed the FSPO's ruling to the law as this will cost them more. Also I am sure that a 3rd party entity such as KPMG would have been brought in to check each and every case, as was in the matter of the original €1615 which was refunded. Maybe I'm wrong on that! It will be interesting to see what AIB have to say on this one.. They are compounding their errors, never mind the interest....
 
Brendan Burgess said:
That is brilliant. I gave a quote to the Irish Times a while ago, I might ring them up with that one instead.

I will use it on the radio tomorrow. "By not compounding the interest, they are compounding their errors"

Brendan
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what station are you on Brendan and what time is it on at?
 
Don't suppose its strategy on their part, to diverge from the whole tracker restoration... try exhaust and baffle us all ... anyway the saga continues. Let's all stay united and strong behind Brendan, to get to the end
 
AIB is sticking to their guns claiming that the interest rate has been independently reviewed by a third party.

www.irishtimes.com

AIB begins issuing refunds to customers denied tracker mortgages

Some 5,900 people will benefit with payments of between €10,000 and €15,000
www.irishtimes.com www.irishtimes.com

However, he [Brendan Burgess] has taken issue with AIB’s decision to calculate the interest refund on the write-down using simple interest. “We are challenging this directly with AIB as we can’t see any justification for using compound interest when charging people and using simple interest when refunding people,” he said.

Speaking to The Irish Times about the refunds, Mr Burgess said: “These are life changing figures for many of the people involved. They will have lower mortgage repayments and a lump of cash that they were not expecting. With a lower loan-to-value it might be a good time to switch their mortgage to another lender with a lower mortgage rate.”

In a statement, AIB said: “As communicated in February we took a provision to cover the application of a Financial Services and Pensions Ombudsman decision to a wider group of AIB customers – about 5,900. In line with the FSPO decision we are writing down 12 per cent of the capital balance at the time the customers’ fixed rate period ended and are refunding the interest charged on that capital amount.


Payments
“The manner in which the interest rate has been calculated has been independently reviewed by a third party. Customers began receiving their payments today.”
 
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My brother used to come out with a similar line when trying to substantiate a far fetched claim - my teacher told me. This really is up there with how pathetic the initial defence was, or insistence on calling it a service failure.
 
It seems to me that AIB are once again doing the absolute minimum they can get away with. If that means that months or years down the line they are made revisit this yet again and pay compound interest (or reinstate trackers and pay compensation) then they are fine with that. They would rather spend their money on corny adverts than pay what they owe and move on.
 
Question please. My next door neighbour got a larger write down on her mortgage than i did. We both recieved out cheques this morning, yet my interest refund cheque is substantially higher than hers! does someone know how these things are calculated! Am worried there may be a cock up and may be forced to return a lump of money if I cash the cheque.
 
The write down is 12% of the balance on your mortgage on the date you exited the fixed rate.

The interest refund is based on
1) The size of the write down
2) The interest rate you were on
3) The date you broke out of your fixed rate

So, it could be substantially different if your neighbour's fixed rate ended in 2012 and yours in 2009 and you were on a fixed rate while she was on the SVR.

Brendan
 
Brendan Burgess said:
This is the extract from the Ombudsman's decision

b) repay the Complainant, to an account of her choosing, the difference between (1)
the amount of interest she actually paid from 30 April 2010 to date, and (2) the
amount of interest that she would have paid on the reduced (written down) capital
balance from 30 April 2010 to date.

I really can't see how that can be interpreted any differently.
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Seems to me AIB are giving themselves a fairly large regulatory stick with which to beat themselves. I’m unfamiliar with the processes surrounding how the Central Bank of Ireland (CBI) compels banks to implement Ombudsman decisions across the board but I would imagine that CBI would be less than impressed with the current status quo, if it turns out that AIB are shortchanging customers.

Likewise, the Ombudsman might take a dim view of AIB’s behaviour in respect of further similar complaints coming before him.

AIB, through their behaviour are effectively goading affected customers to complain further. Or lodge civil proceedings in the courts.

As regards the latter, maybe AIB know that anyone bringing a claim for the difference between compound and simple interest would be limited to District Court proceedings and wouldn’t bother suing given the small amounts. And given that any customer would also have to prove their case from scratch. Hard to know.
 
Thanks Brendan...appreciate that. Actually you wet spot on. I was on a fixed rate for a while while she was on a variable rate.... You're a gentleman. Thank you so much for all your hard work......you are a hero!
 
Jayom75 said:
maybe AIB know that anyone bringing a claim for the difference between compound and simple interest would be limited to District Court proceedings
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Hi Jay

It's simply incompetence followed by obstinacy on their part.

There is no deep strategy to deprive people of money.

I imagine that someone like Colin Hunt who has a Ph.D. in economics will be tearing his hair out when he sees this and demanding to know how come a bank even has a computer that can calculate simple interest. There should be no need for it.

Brendan
 
Brendan Burgess said:
Hi October

I used that when chatting to the Irish Times today and they have reproduced it. I am glad you didn't copyright it.

Thanks.

Brendan
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you seem to be getting a lot of quotes here and using them in the media Brendan, can't wait for tomorrow's interview!!
:):):p:cool:
 
Has Karen or anyone on her behalf reached out to the FSPO to let them know what AIB have done? I appreciate you might not be able to say but I can't imagine he would be too impressed by this.
 
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