Thursday 13 December 2018

AIB still denying thousands of customers a good-value tracker rate

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Charlie Weston

Charlie Weston

THE reluctance of AIB to restore thousands of people to tracker rates will have to be resolved in the courts.

The Oireachtas Finance Committee was told there are 5,800 people known as “prevailing-rate” customers.

AIB admits the customers were wrongly denied the option of moving to a tracker contract when their fixed-rate contracts expired from 2008 on.

But it claims the “prevailing” tracker rate that they would have been entitled to at the time was 7.9pc due to high funding costs.

This is much higher than the prevailing variable rate at the time.

Most tracker rates are set at around 1pc above the European Central Bank rate, which is 0pc at the moment.

The affected customers have been offered cheques for €1,615, with €615 of this to cover the cost of taking professional advice, but the bank won’t put them back on a low-cost tracker.

It claims the customers were not financially disadvantaged when AIB failed to offer them a low-rate tracker.

Fianna Fáil finance spokesman Michael McGrath asked AIB chief executive Bernard Byrne if the matter was closed, as far as the bank was concerned.

Mr Byrne said: “Based on the information we have and where we are, it is closed.”

He added that the prevailing-rate customers who are not satisfied with the bank’s response have the option of appealing their case to the financial services ombudsman, or to take a case in the courts.

Mr McGrath responded that the issue was down to interpretation, but it now seems the matter will have to be resolved in the courts.

The banking group, which includes EBS and Haven, has already owned up to close to 12,000 tracker-denial cases.

This includes some 500 tracker denial cases at its subsidiary EBS which it said this week it was prepared to deal with, by putting them back on a tracker rate and repaying them overcharged interest.

But it is refusing to put prevailing-rate customers on to a low-margin tracker rate.

AIB had withdrawn its tracker mortgage products, which tracked the European Central Bank’s base rate, in October 2008 just before these customers emerged from their fixed-rate contracts.

Despite agreeing to pay them €1,000 in compensation and €615 towards professional advice for breach of contract, the bank claims they suffered no financial detriment by being denied a low-rate tracker.

The TDs and senators on the Oireachtas Committee were told in documents supplied by AIB: “Between October 2008 and December 2013, AIB had withdrawn the prevailing tracker rate and, as such, this choice was not available.

“Had the bank maintained a prevailing-tracker rate during this timeframe it would have been more expensive than the variable rates available at that time, as such these customers were not financially disadvantaged,” the bank claimed.

Tracker expert Padraic Kissane said the AIB response to the prevailing-rate customers is waffle.

He said the bank was still failing to put the customers first, despite claiming to do so.

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