I think EBS will also have the Stowe case in the back of their mind too. If they decide to take this to the court and lose considering what was argued in that case EBS could be in more trouble.
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EBS What does an EBS "Variable Base Rate" mortgage mean?
- Thread starter tonymac
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The key to this is the correspondence between the brokers & EBS. If people feel they have been affected they should seek an FOI data access request from EBS but also demand all correspendence between their broker & EBS when loan offers were being discussed. Once you get that info you should go to to Padraic Kissane with it. I know of at least 2 cases were brokers were either given written information/correspendence or at the very least verbally informed by EBS that the variable base rate is a tracker that the customer will revert to after fixed term.
gnf_ireland
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My understanding of the Stowe case was to do with the admission of oral evidence over 6 years old. I would imagine that oral evidence would be very much individual to each and every case, and not something that would apply across the board.
Its also worth noting the Stowe took the case against the FSO, not EBS.
EBS have a choice in this one - they either
(a) 'concede' variable base means tracker and move everyone with that term onto a tracker => likely to be very expensive [any idea of cost here - 50m, 100m, 100m+?] and would no doubt set a dangerous precedence for similar cases in the future OR
(b) 'don't concede' and defend their position to the CB review team initially and to the FSO. This discussion would be marginal and there is no clear consensus here that this would win. The majority of people on one side are those impacted, the neutrals are less convinced by the arguments. Therefore its likely to require a high court challenge post FSO ruling, either by EBS or a customer. The court will then decided the meaning of the phrase. The only downside here for EBS is if they lose they will have to pay costs and maybe some extra compensation to the customer, but I wonder in the grand scheme of things how material that would be [100k against 50m is small change in reality].
I simply don't see them conceding on this unless the CB box them into a corner - a bit like BoI and the staff mortgages issue or KBC & the flyer ! I simply cannot see the CB doing this on something which is not that clear cut
gnf_ireland
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Absolutely - something we can agree on !
But I am not even sure you would need to go to Padraic Kissane if the written information/correspondence says the customer would roll onto a tracker. This is pretty clear.
Its also probably asking the broker for a full and complete copy of all file records, including any correspondence with the bank on the case, or generic discussion around rates.
About 200m+ would be a starting point.
Maybe this written correspondence exists...
The meaning of the phrase has already been defined. This forum has only highlighted some of the evidence which is more readily available. I’m sure neutrals would be convinced if they saw all of the evidence too.
gnf_ireland
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If people at that confident, a customer has nothing to lose by taking a court case to win their tracker back, and seek damages in the process
Maybe - and the key word is maybe. If someone has a copy of it, then it definitely skews the discussion greatly and should go to someone like Padraic Kissane to ensure all customers in the cohort are covered.
My (personal) view of the CB review is they went through all the groups of people impacted and CB pushed hard for some that they felt were grey enough to be included - KBC flyer customers and BoI staff trackers for example, that the banks were resisting at the time. Any major cohort which has not had some level of progress at this stage, are unlikely to be including in the 'concede' category from the bank - rightly or wrongly. This is my personal view only I should add.
gnf_ireland
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This kind of number will not be conceded without a major fight ...
The cost of a high court case is immaterial in comparison
Red onion-i’m curious as to where you got this figure from? I’m not saying it’s not true just want to know how you calculated it?
The cohort affected are new EBS customers who started off on a fixed rate or were offered a fixed rate to roll onto this variable base rate between 2004-2008. No idea how many customers that could be. However you & GNF make some good points about the cost of this. Even if the evidence is conclusive(and I believe it is) I think the cost of pay out and cost to the state (when it’s trying to sell AIB/EBS)means they will fight it in any way they can such as blaming brokers.
Conservative estimate. The have a 6bn book, with 35% on trackers.
So say 30% are on a 'base rate'. And they overcharged by an average 2% per year, over at least 6 years. It quickly adds up.
More than 30% are on a base rate, so it's a question of which ones might have understood that to mean tracker.
Thanks Redonion. A lot of money and customers so.
During this central bank review have any other banks gone down this route of differntiating individual cases within certain cohorts,in this case the “variable base rate” cohort?
I’d imagine they will find it challenging to do this if argument moves from one of interpretation of a term & expectation of tracker from a customer at that time to one where there is concrete evidence that the variable base rate is a tracker.
haveaniceday
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just thinking a trawl of EBs broker websites on archive.org might throw up some info on the ebs rate terminology in use around 2007/2008 - anyone know of ebs broker websites worth a lookup?
From 2004 to the end of 2005 EBS used in their IT computer system program Word & Excel Office Profesional.
The Tracker form is manualy edited and saved as a blank document until a EBS Sales Representative was saving the document with the name representing loan account number.
In the system the Tracker form does not exist or ever existed and I will post the picture to prove that.
In 2006 all the system update to Office Program Word & Excel 2006 Busines Profesional.
They use combination of Word & Excel in the same document/spreadsheet with the posibility to filter all customer account data.
The Tracker was described in the system as follow:
MARGINAL CASE: With the option Yes/No to be selected by EBS Sales rep.
When Yes option was selected by EBS Sales rep (based on condițional formating) the rest of the form was populated as follow:
Interest Type - Variable
Interest Rate - Variable Base + 1.00% (or 1.25% or whatever rate was available at that time/Year/month after the loan cheque was issue) - (No mention of ECB - Only for customers who start with Tracker the loan offer document mention as per above form mention Variable Base ECB + 1%).
If you start with Fix rate and prevailing Variable Base with margins mention in the loan offer but yet margins not specified..... and not mentioned about ECB.
This theory is still there.
Regards,
RR
Razvan-thats a pretty remarkable post!! Some serous investigative work and inside knowledge. Seems to confirm my theory that they simply removed the interest rate basis on the fixed rate loan...but same underlying interest rate basis is applied on their system i.e. that there’s a margin above variable base(ECB) on our loans.
gnf_ireland
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I cannot possibly comment on the above, so I am guessing you have internal knowledge to make such a post and can prove this.
Whether this is what was done at the local office level or the central underwriting level I have no idea
I just find it bizarre, in 2004/05 that a financial institution lending billions in mortgages would not have a reasonable automated ICT system underlying it - even if it was mainframe based. The industry I work in has been pretty much automated since the 1980's.
gnf_ireland
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Of course then you have to ask the reason WHY did they do this? It must have been done for a reason?
It was automated but still dependable on user (Sales rep) to enter the data (house Value, customer details)
I can only theorise. I think a lot of banks pushed fixed rates at the time to lock people in and stop them moving as there was so much competition but EBS clearly forgot to update their system that produced these rates & margins. I guess they simply removed the interest rate basis/margin from the loan offer so they would have the power & control at end of fixed term.