Apologies and a few thousand euro are not enough
Published 29/07/2015 | 02:30
In 2009, PTSB removed trackers from 1,372 borrowers because they broke out of their fixed term early. PTSB argued that while their mortgage agreement entitled them to a tracker on expiry of the fixed term, they lost this by breaking out early.
A number of these borrowers disputed the loss of their tracker and made complaints to the Ombudsman during 2010 and 2011. The Ombudsman upheld most of these complaints and directed PTSB to restore their trackers. PTSB appealed the cases to the High Court and Justice Hogan's decision in September 2012 was damning on PTSB.
"This, undoubtedly, is a sophisticated and clever argument which, for example, had it been advanced in an undergraduate law examination would have attracted high praise from the examiners as an original demonstration of legal craft and skill. But this type of argument should really have no place in the construction of financial documents involving retail customers."
Despite this clear judgment, PTSB initiated an appeal to the Supreme Court, thus putting all affected cases on hold. For a further three years, they continued to charge the inflated SVR rate.
The Central Bank only began its enforcement investigation in June 2014. And borrowers had to wait a further year before the refunds were announced. And even still, the Central Bank has not published the results of its enforcement investigation.
How many people lost their homes since this "sophisticated and clever argument" was struck down by the High Court?
How many people have lost their homes since the Central Bank woke up in June 2014? Did the Financial Services Ombudsman alert the Central Bank to a systemic problem when they ruled on the first few cases back in 2010? If they did, why did it take them four years before taking any action?
The six years between the loss of the tracker and its restoration is a very long time. During that period many people made huge financial sacrifices to try to keep up to date with their mortgage repayments. Most struggling borrowers worried about arrears and losing their home. They cut back on other essential expenditure in order to meet their mortgage repayments. The average refund is €22,400.
That is a huge amount for families to sacrifice. Affected borrowers have claimed that the financial pressure has caused ill health, depression and marital strains. How can €3,500 compensate for that?
And there are many other questions to answer. 358 customers will be restored to a tracker rate of 3.3pc or above. Did the Central Bank approve that rate? What about borrowers, who were entitled to trackers, who switched from Permanent TSB because of the high standard variable rate? How will they be compensated for the life-long loss of a tracker?
What about borrowers who overpaid their mortgages because of the very high rate? If they had cheap trackers, they would probably not have overpaid their mortgages?
And what exactly is the Central Bank's Enforcement Action investigating?
Banks make mistakes. Banks and customers interpret clauses differently. In 2010, Bank of Ireland restored trackers to 2,000 people with no need for an Enforcement Investigation.
Also in 2010, PTSB restored trackers to 300 people, again without an Enforcement Investigation. The fact that an Enforcement Investigation is taking place suggests that the problem goes beyond a simple mistake or a difference of interpretation.
If it was a simple error and there was no deliberate wrongdoing, then there should be no fine.
But if the Central Bank finds that there was a deliberate campaign to deprive people of their trackers or that Permanent TSB engaged in delaying tactics to exploit the statute of limitations, then punitive damages should be levied on Permanent TSB and paid to the borrowers.
Apologies and €3,500 are not enough.
Brendan Burgess is the founder of the consumer forum askaboutmoney.com