Many people will have received letters, others will have had the interest rate on their accounts rectified, others still have received redress and compensation. But as the tracker scandal continues to grow in scale, it seems that there are still thousands of people out there who may be as of yet unaware of a wrongdoing on their mortgage account.
Last week the Central Bank said that some 13,000 mortgage accounts (in addition to 7,100 already identified) were affected, but financial adviser Padraic Kissane expects this figure to more than double to between 26,000-30,000.
This means that a substantial number of people may be unaware that their mortgage has been impacted, and they are therefore due compensation and redress. But could this be you? It’s a complicated issue, which lies beyond the confines of a newspaper article, but if you’re troubled by whether or not you could be impacted, here are some steps to help you delve into the matter.
Step 1: Get your mortgage documentation
The key to whether or not you have been impacted lies in your mortgage contracts. If you were promised something the bank didn’t deliver on, then you may fall into the impacted category, and will be entitled to redress and compensation.
“If you think you might have an issue then you need to look at your contracts,” says Kissane.
And if you haven't meticulously filed this information at home, then it's never too late to get it. You can send a data access request to your lender requiring all the information they hold on file for you, although you may be charged a fee for doing so (KBC Bank customers can access the letter here). AIB is currently waiving the fee of € 6.35.
Step 2: Consider what to look out for
From what we know so far - and remember this is liable to change - so-called “impacted” mortgages centre around a number of issues.
You were on a tracker rate, moved to a fixed rate, and were then denied a
tracker rate
According to the Central Bank, some 60 per cent, or 7,800, of the 13,000 impacted mortgages have arisen because the borrowers were not offered a tracker rate when they should have been.
Customers of KBC Bank for example, were understood to have been promised that they could move onto trackers at the end of their fixed rate period.
In the case of AIB, back in October 2008, the bank did away with tracker mortgages for new customers; but it failed to take into account all those customers who had switched to a fixed rate, and should have been entitled to a tracker rate when their term ended. To rectify this, from 2015, the bank started offering these impacted customers a tracker rate of 3.67% above ECB.
If you feel this could be you, you will need to check your loan documentation to check whether in the fixed rate loan offer, it was indicated that a tracker option would be available when you came off a fixed rate.
You received the incorrect rate of interest on your tracker mortgage loan
According to the regulator, a further 40 per cent of the 13,000 impacted in the latest review did not receive the correct margin.
In Helen Grogan's case for example, she was offered a tracker at 0.8 per cent above ECB with Permanent TSB, discounted for the first year to 0.6 per cent. But when the year ended she found that the rate had jumped up to 2.225 per cent above ECB, so she opted for a variable rate instead.
If you’re wondering if you are paying your mortgage at the correct rate (and this is a useful exercise for everyone anyway) you can put your details into a site like www.bankrate.com which should give you a monthly repayment based on the interest rate you understand you are paying.
You were never on a tracker, but weren’t given the option of switching to a tracker when a fixed rate ended
As we now know, there is a whole raft of AIB customers who may have been excluded thusfar from its redress scheme, which to date covers some 3,200 people. This is because it hasn't considered those borrowers who were on a fixed rate contract in late 2008 and should have been given the option of switching to a tracker rate once their term was up. As Dominic Coyle has reported in this paper, this means that a further 9,500 customers or so could be subject to the investigation. Kissane however says that people who fall into this category are a " debatable cohort" and it's not yet clear whether or not they have a case.
You don’t have a case
Just because you haven’t been able to benefit from the low rate of trackers in the last few years as you were never on one, doesn’t mean you are now entitled to compensation or redress. As Kissane says, the “level of chancers” hoping to benefit from the scandal is growing as media attention on the issue grows. So, just because you never asked for a tracker doesn’t mean you have a case against your borrower.
“There is a responsibility on both sides,” says Kissane.
Step 3: Get advice
If your loan documentation is telling you that there may be an issue, then it might be time to take professional advice.
“If you think there’s a case, or the documentation gives you a hint of case and you could be within the scope (of the investigation) contact a financial adviser who has experience in this,” Kissane says.
There are a number of solicitors and financial advisers currently offering advice on this issue, so consider your options, and the fees etc that might apply, before selecting one.
Similarly, if the bank says you were overcharged and tells you by how much, make sure you get a copy of its calculations and either check the figures carefully yourself, or get them verified professionally.
Step 4: Talk to your bank
This is a step that some people may wish to forego, on the grounds that their trust in their lending institution has dissipated as a result of these issues.
Also, some banks are not encouraging confused customers to call. Permanent TSB for example, says that “there is no need for customers to take any action” if customers are unsure as to whether or not they might be impacted, although it also offers a freephone number to deal with such queries.
However, generally it is recommended that you put any concerns you may have in writing, which will then be dealt by your lender’s complaints department. If the response you receive isn’t what you expect, you can then bring your concerns to the Financial Ombudsman.
Step 5: Consider what compensation might be available
Compensation differs from bank to bank, but should include three parts: 1) being returned to the tracker rate; 2) refund of money owed due to over-charging; and 3) compensation. According to Kissane, the differential in rates eligible people incurred is typically of the order of about 3 per cent - which can add up to considerable over-payment over a number of years.
o far, just AIB and PTSB have commenced their redress schemes. It is understood that Permanent TSB is offering compensation of 10 per cent, while AIB is offering between 15 -30 per cent on home loans, and 7.5-15 per cent on buy-to-let mortgages. In the case of AIB for example, someone who has over-paid €10,000 will receive this sum back, plus compensation of between €1,500-€3,000 if it was their primary residence. It’s understood that the bank is offering considerably more where the over-charging has resulted in the loss of a property.
Those affected are also being offered a fee towards the cost of professional advice. However, while some people are accepting the compensation offers, others feel it is not sufficient and are either appealing with their lender - three lenders have no established appeals processes for example - or approaching a solicitor or financial adviser to seek further compensation.
