AIB offering tracker redress, says IMHO

The Irish Mortgage Holders Organisation has written to 4,200 AIB account holders to encourage them to "come forward" if they believe they were "denied their contractual right" to a tracker mortgage after their fixed interest rate periods had expired.

This follows the emergence of a small number of cases involving AIB customers who believe they should have been offered trackers when they came off their fixed rates in the years up to 2011.

It also comes hot on the heels of Permanent TSB’s financial redress programme for 1,372 mortgage customers for a “failure” to inform them that they could have availed of a cheaper tracker rate from 2006 onwards.

In his letter to AIB customers last Friday, David Hall, chief executive of the IMHO, said it believed similar issues had arisen at the State-owned bank and its subsidiary brands, EBS and Haven.

“Indeed, we are aware of a number of cases within AIB where customers have been returned to their tracker rate, along with a refund of overcharged interest, having been denied the rate for a number of years,” he said. The IMHO has set up an email address, tracker@mortgageholders.ie,to deal with AIB customer queries and supplied a template letter for the account holders to request a copy of their file from the bank.

Mr Hall told The Irish Times one AIB mortgage customer dealing with his group had received an offer of €20,000 as compensation for overpayment in the years when they should have received a tracker rate. Two others customers had also received offers.

Mr Hall has also written to Derville Rowland, director of enforcement at the Central Bank of Ireland, urging her to "immediately investigate" all Irish lenders to check if their customers were given the appropriate interest rate.

New Beginning, an advocate for people in mortgage arrears, is pursuing a legal case against AIB in relation to the tracker issue on behalf of a customer of the bank. Ross Maguire, a co-founder of the group, said about 30 cases had been brought to it since PTSB announced its redress scheme in late July.

Three options

It is understood the contracts offered by AIB in the years before 2008 gave customers three options for when their fixed interest periods expired.

These were a “further fixed interest rate period” or “conversion to a variable interest rate” or “conversion to a tracker interest rate”. Customers who did not exercise this choice were automatically converted to a variable rate.

After October 2008, customers were not given the tracker rate option as the bank had scrapped the loss-making product. New Beginning argues AIB was not entitled to unilaterally alter its commitment to the customers.

The IMHO and New Beginning have also warned that time is running out for many customers to sue AIB due to the six-year time limit for taking a case through the courts or via the Financial Services Ombudsman.

When contacted about he tracker issue, AIB said: “Each bank operating in the mortgage market has different terms and conditions at different points in time. At AIB, the performance of these products is kept under constant review, particularly at times of market events.’’

The Central Bank said it “continues to examine some tracker related issues with lenders” but would not comment on its “supervisory engagement” with the banks.