In light of the on-going tracker mortgage scandal involving banks in Ireland, Cork law firm, BDM Boylan Solicitors seeks to inform affected customers on the redress and compensation process and how it will be rolled out in the coming weeks and months.
William Hanly, Solicitor, said: “For many this is a complicated and stressful issue to deal with and we continue to hear personal stories of how lives have been negatively impacted by the banks’ actions.
“The banks must ensure that all affected customers are identified and that redress and compensation are delivered swiftly in a straight forward manner, which customers understand. It is important for the customer to be fully aware of the categories of redress available as the banks’ overriding interest will be to close off this matter at the lowest cost possible to them”.
“The most important step a customer can take once they learn they have been affected is to engage a solicitor who will be able to comment on the adequacy of any offer put to them and to advise on the available steps on obtaining redress and what timelines apply to taking these steps”.
In 2015 the Central Bank of Ireland decided to carry out an industry-wide review of tracker mortgage accounts and how in December of that year they wrote to all lenders setting out the framework for the Tracker Mortgage Examination. All lenders were required to examine the extent to which they had been meeting their contractual obligations to customers, and examine the transparency of their communications with customers in relation to tracker-related issues. The Examination covers all lenders who may have sold tracker mortgages in the past, including those no longer selling mortgages. It also covers mortgages that have been redeemed or switched to another lender.
William Hanly outlines the complicated redress process:
When a lender identifies an impacted customer, it must firstly:
- Stop charging the incorrect rate of interest on the customer’s account
- Ensure that any further customer detriment is stopped as early as possible
- Communicate this to the customer.
Lenders must then carry out a full review of the impacted customer’s mortgage account. Once this is complete lenders must issue a detailed letter to the customer explaining:
- The exact nature of the error
- The correct rate to apply to the customer’s account
- Information on the next steps of the Examination, including the redress and compensation process where applicable.
There are three elements to any payment one will receive once investigation has been concluded:
- A redress amount to cover the amount overpaid, while on the incorrect rate; a refund of charges applied to one’s mortgage account and interest to compensate for not having access to the money overpaid on one’s mortgage.
- A compensation amount to compensate for the bank’s failure to charge the correct rate and the impact that this had.
- A payment amount of €615 to cover one’s cost of obtaining independent professional advice that one may wish to seek on this matter.
William Hanly said it is worth noting: “The compensation figure will be based on a percentage figure of the interest overcharge, plus a percentage figure of the Time Value of Money – or an appropriate minimum amount, whichever is higher.
“This is a very subjective assessment and is likely to be an area where differences of opinion could arise as the full financial and personal impact of the failure of the bank may not be fully understood by the bank when making their assessment of this compensation figure.
“If you have lost your home or property and if your circumstances were impacted to the extent that you suffered personal and economic hardship as a consequence of the actions of the bank in the treatment of your mortgage, then it is possible for you to seek a higher level of compensation under the appeals process than you may have been awarded through the bank’s own review process.
“It’s important that you can ‘evidence’ this impact to support any appeal that you may decide to undertake. Independent professional advice is something that should be considered by anybody choosing to pursue an appeal and any reasonable costs for this advice will be paid under the Appeals process. Any appeal will not impact on the redress and compensation amount already offered, which can be accepted at time of offer.”
BDM Boylan Solicitors & Business Advisory
Clarkes Bridge House, Hanover Street, Cork
021 431 3333