H Emlyn, I am getting 20,372 for the compound and 17,044 for the simple interest.
Again Brendan, a rhetorical question! When did you ever see simple interest used apart from a primary school Maths exam! Interest compounds.... end of!The more I think about this, the more stupid and frustrating it is.
Say that 10 years ago, I had a loan of €100k with 20 years left.
Someone else got a top loan of €10k but by accident they added it to my account. I didn't notice.
They then increased my repayments to amortise the full loan of €110k - again , I didn't notice.
Now, 10 years later they realise the mistake.
Surely it's clear that they owe me €10k compounded at the mortgage rate?
If it would help them understand and it answers Sadim's rhetorical question, when they get onto the other guy who has paid nothing on his top up, will they be charging him simple interest for the last ten years?
Brendan
What third party of repute would stand over an interest calculation like that? The mind boggles. I have always said banks as a sector are rotten but AIB is the recidivist Darth Vadar of the entire sector. They make HSBC look saintly!AIB is sticking to their guns claiming that the interest rate has been independently reviewed by a third party.
AIB begins issuing refunds to customers denied tracker mortgages
Some 5,900 people will benefit with payments of between €10,000 and €15,000www.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.”
Did you get a time slot for today?Sorry, I got bumped by Phil Hogan!
They will reschedule for tomorrow time to be decided.
Brendan
Have AIB reverted to you on the rationale as to why they are calculating simple over compound interest?
| Enforcement of Ombudsman decision | Financial Services and Pensions Ombudsman Act 2017 | |
| 65. (1) Where a financial service provider or a pension provider fails or refuses to comply with a decision of the Ombudsman, within the period, or by the date, specified in the decision, the Circuit Court shall, on application to it on that behalf by— | ||
| (a) the Ombudsman, as he or she sees fit, or | ||
| (b) the complainant in whose favour the decision was made, | ||
| make an order. |
So it's up to the Ombudsman or Complainant to make an application to the Circuit Court to enforce the decision. The Central Bank might have a view on this as well.
Enforcement of Ombudsman decision Financial Services and Pensions Ombudsman Act 2017 65. (1) Where a financial service provider or a pension provider fails or refuses to comply with a decision of the Ombudsman, within the period, or by the date, specified in the decision, the Circuit Court shall, on application to it on that behalf by— (a) the Ombudsman, as he or she sees fit, or (b) the complainant in whose favour the decision was made, make an order.
Brendan, sorry to ask but in terms of your engagement with the Ombudsman, will you also be including in your complaint the fact that for those of us who no longer have our mortgage with AIB, AIB are only paying interest up to date we redeemed our mortgages and not to todays date.They are sticking to their guns, so I will be making a complaint to the Ombudsman that they have not properly implemented his direction.
As it will shortly be back before the Ombudsman, and the Ombudsman process is confidential, I had better not comment publicly on it.
Brendan
Thanks Brendan. It’s really beggars belief how they deem to be correct in using simple interest. So be interesting to see how it plays out with ombudsman.They are sticking to their guns, so I will be making a complaint to the Ombudsman that they have not properly implemented his direction.
As it will shortly be back before the Ombudsman, and the Ombudsman process is confidential, I had better not comment publicly on it.
Brendan
will you also be including in your complaint the fact that for those of us who no longer have our mortgage with AIB,
Thanks Brendan. Will take up the battle with AIB directly then. Many thanks for all your help.No, I won't.
The Ombudsman deals with each case on its own. I can only raise the enforcement of his decision in Karen's case.
Brendan
Brendan just a small thing on this- should we make a formal complaint to AIB ourselves based on our individual payouts or do you think best to see how it plays out with the ombudsman in Karen's case and go from there? I received the cheque yesterday and it so blatantly wrong how they've calculated the payout relative to the ombudsman's instruction. Thanks again for all your help on this.They are sticking to their guns, so I will be making a complaint to the Ombudsman that they have not properly implemented his direction.
As it will shortly be back before the Ombudsman, and the Ombudsman process is confidential, I had better not comment publicly on it.
Brendan
Hi Brendan,I think you should wait.
I don't think it's going to take a long time for the Ombudsman to make a direction one way or the other.
If he says that they are to pay compound interest,then the CB will tell them do apply it to the rest of the cohort.
Brendan
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