Brendan Burgess
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The Ombudsman has included Karen's case in the decisions published today.
You can read the full decision here:
You can read the full decision here:
AIB Ombudsman publishes AIB Prevailing Rate decision
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Brendan Burgess
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I attach the Ombudsman's summary of this decision.
Karen has been renamed Susan.
Brendan
Karen has been renamed Susan.
Brendan
It reads to me that the FPSO certainly applied the fairest legally binding outcome to both parties. The courts would apply a legal decision rather than fair one right? e.g. If the courts also acknowledge the contractual obligation to a prevailing rate tracker and that can be shown to be ECB + 1.5% the courts are black and white and would award or deny a tracker based on the contract alone rather than worry about any potential financial impact on AIB? Or is that just wishful thinking?
The legal aspect is the million dollar question, our own judgement is always going to be clouded by wishful thinking.
I don't think AIB would agree that is was a fair judgement though, they fought tooth and nail against it. I think the FSPO really just dismissed AIB's case with worrying too much about them. I've re-read the judgement a few times now and to me it just feels like the Ombudsman didn't draw a line between the redress and the loss of a tracker in value terms.
Don't get me wrong, personally I think the redress is brilliant but I'm not sure why the FPSO held back on full redress. Maybe he felt it is a matter for the courts to decide in terms of a legal judgement on the contract terms but the extract below is fairly explicit.
"The Ombudsman further found that it was unreasonable for the bank to attempt to retrospectively create the tracker interest rate margin that it argued it would have offered Susan when the fixed interest rate period on the mortgage loan account expired in April 2010, by using post-breach factors that could not have been known to it in April 2010".
The above slightly jumps out at me in terms of the CBI intervening since for 300 of the cohort to get full redress. I don't see a distinction in what FSPO saying AIB couldn't do with what the CBI did post the FSPO decision in saying AIB would have taken 3 months to adjust their tracker rates to a higher prevailing rate, without quoting a rate. The issue has always been the prevailing rate (amongst multiple other things).
I think everyone agrees now that contract clause 3.2 was so valuable in this. The FSPO has rubbished AIB's calculation of what they suggested would be the rate (plus their interpretation of the "then prevailing rate") and the CBI have made their intervention also, so where to next for the 5,600?
Notwithstanding the above, morally, when everyone knows the bank made mistakes, and we are beneficiaries of said mistakes, is the onus on the cohort to say thanks to AIB and leave it at that? Or does the cohort say, well there is legs in this to pursue it further because perhaps the courts would see it entirely as black or white and the tracker margin is either 1.4% or 1.7% and full redress should ensue, or whatever the court would consider appropriate (wishful thinking part). I honestly don't know the answer to that question. Lots of ifs and buts but if the shoe was on the other foot, what would AIB do.
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The crux of the issue here is that AIB didn’t have an actual prevailing rate during the period when it had ceased issuing tracker mortgages. Only a court would have the power to insert or construct a provision into the mortgage contract constituting a “prevailing rate” based on what it ought to have been, with regard to relevant independent evidence. The Ombudsman declined to do so, and declined to estimate what the prevailing rate might have been, possibly because he does not have such a power, or because he hadn’t the requisite evidence to decide what the prevailing rate ought to have been (he rejected AIB’s suggestions in this regard). It will take a full High Court hearing and Decision in favour of a customer to determine this question. The Ombudsman reached his decision on the basis of fairness. Judges on the other hand will have regard to the evidence of both sides, the contract and relevant contract law and equity principles.
Brendan Burgess
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Our argument was that they did have a prevailing rate and it was 1.5%.
Just because they broke their contract and stopped offering it, doesn't mean that they didn't have one.
That would be the key issue I would ask a High Court judge to determine.
If the High Court decides that AIB did not have a prevailing rate, then they would have to decide what that rate would have been.
AIB said "it would have been up to 12%" which was clearly nonsense. All they can say is what it should have been or what it could have been.
In practice the Prevailing Tracker Rate had always been at or below the SVR. I would hope that a judge would agree with that argumet.
Brendan
Brendan - if this was the rate that was on offer as at the time they ceased offering trackers, then it’s an extremely compelling argument. In fact, the first place a judge would look is as at the date when trackers ceased to be offered.
If the Ombudsman can't decide what the rate would have been and AIBs methods have been shown to be flawed using knowledge gained post-2010 in the absence of any other rate the only rate that exists it the last one available the 1.5%. We are contractually entitled to a tracker and this is the only one that now exists!
I am no legal expert but you'd have to think its worth the roll of a dice.
Probably best to see where we all are 1st September after all comms and monies have been sent out from AIB and then see how we want to progress with setting up a fund in sending someone to the high court.
Probably best to see where we all are 1st September after all comms and monies have been sent out from AIB and then see how we want to progress with setting up a fund in sending someone to the high court.
Absolutely also the CBI awarding the 300 trackers on a fictional time frame of 12 weeks can only strengthen our case, I said it jokingly but it took AIB 11 months from the time it next set a tracker rate in 2013 to make it available so setting a time limit seems counter-intuitive to me. It should be all or nothing.
Brendan
Just on the above, is there a reason this hasn't come before the high court before now do you think? I am surprised here by some people having representation in these matters when it's clear the decision that forced AIB's hand was an FSPO one based on the case Karen and yourself put together, so not sure what such legal representation added to this point..
I mentioned on another thread that we didn't meet the PK criteria for his group way back when, and that didn't seem to go anywhere publically at least (a friend of ours who is part of that group sent on an update from him the other day that was almost verbatim your post here when the additional prevailing rate info was released post your meeting).
If it was a legal jigsaw, the heavy lifting seems to have been done by the yourselves, followed by FSPO, followed by the CBI without external legal from a mortgage holders perspective anyway in the cohort, so is it only now that all these things are in place that the legal aspect will kick off in earnest (if some people are so inclined?)
Thanks
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Brendan Burgess
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Hi Megafan
As I understand it, AIB briefed Padraic Kissane at around the same time as they briefed me. I have not seen his letter to his clients, but I would expect it to be very similar to the report I made.
From memory, at the AGM, AIB said that they had been served with 12 cases on this issue. Slow as the Ombudsman might be, he would be quicker than the courts.
I pursued the Ombudsman case with a view to getting a decision quickly on behalf of the 5,900 borrowers.
I gather that the solicitors are taking cases with a view to settling them on a non-disclosure basis so they don't really want to go to open court.
Brendan
As I understand it, AIB briefed Padraic Kissane at around the same time as they briefed me. I have not seen his letter to his clients, but I would expect it to be very similar to the report I made.
From memory, at the AGM, AIB said that they had been served with 12 cases on this issue. Slow as the Ombudsman might be, he would be quicker than the courts.
I pursued the Ombudsman case with a view to getting a decision quickly on behalf of the 5,900 borrowers.
I gather that the solicitors are taking cases with a view to settling them on a non-disclosure basis so they don't really want to go to open court.
Brendan
That is probably AIB's exit strategy right there, pay as they emerge. If a group gets off the ground here, it would probably settle non disclosure as well if it was on offer.
You took care of the altruistic part for everyone. It is quite the legacy in fairness.