1. Permanent TSB Overcharging Borrowers
A mortgage is a contract between a customer and a bank; the bank lends the borrower money and the borrower repays the loan each month together with interest until the loan is repaid. A bank’s interest rate determines its profit on the loan. In the main, banks make huge profits on their mortgages.
Approximately 1,400 Permanent TSB borrowers’ mortgages entitled them to lower interest rate tracker mortgages. However as a result of the bank’s actions, these borrowers were forced to pay much higher variable rates for up to 6 years. As a result these borrowers were charged too much interest. The overcharging varies from borrower to borrower but it could have been as much as €900 per month or in excess of €10,000 per year.
To put it as simply as possible, Permanent TSB is required by law reimburse borrowers any amounts they overcharged together with interest. Permanent TSB must also adequately compensate their customers for overcharging them in the first place.
Permanent TSB have sent out letters to all of those affected together with details of their redress scheme.
Their redress scheme offers to do the following:
- To move the mortgage to the tracker rate (correct rate).
- To repay any amount overcharged (less any arrears on the mortgage).
- To provide compensation.
Permanent TSB has calculated the compensation payable at approximately 9.5% of the amount overcharged. From a legal viewpoint, Permanent TSB has no right to determine the amount of compensation that should be paid. From a practical point of view, Permanent TSB has no ability to determine the amount of compensation that should be paid. Compensation can only be determined on a case by case basis as the amounts overcharged and effects of the overcharging vary from borrower to borrower.
If Permanent TSB’s overcharging resulted in a couple’s home being repossessed, how can they quantify what compensation these people should get?
If Permanent TSB’s overcharging resulted in a couple struggling to make repayments over the last few years, how can Permanent TSB quantify the financial pressure, stress and hardship this has caused?
If Permanent TSB overcharged a borrower €40,000 over a 5 year period, how can they quantify the loss of opportunity this has caused? For example, one borrower might have invested this money in shares that have now doubled in value. Another couple may have put this money into a pension which would have entitled them to tax relief on their income. Another couple may have used this additional money to send their child to a private school.
Therefore, it is very important that you consult with your solicitor if you have been overcharged.
3. Questions & Answers
Q. We accepted Permanent TSB’s offer of compensation. They sent us a confusing 13 page letter stating they overcharged us and details of their redress scheme. We didn’t seek legal advice from our solicitor and accepted the compensation. We now think the compensation we received was inadequate. Is there any legal remedy open to us at this stage?
A. Yes, even if you accepted the compensation offered you can still pursue Permanent TSB for more compensation. As Permanent TSB has admitted in their 13 page letter that they have overcharged you, you are entitled to sue them for breach of contract (breaching the terms of your mortgage agreement). Any amount Permanent TSB has already paid can be deducted from any court award or any settlement your legal team negotiates for you. We are currently representing a number of borrowers in this position.
It is important that you contact your solicitor as soon as possible.
Q. We received a letter from Permanent TSB advising that they incorrectly have our mortgage on the higher rate and have overcharged us. However, they will not move our mortgage to the lower tracker rate straight away unless we complete and return the Mortgage Instruction Form and accept the compensation offered. Are they allowed to do this?
A. No. Regardless of whether or not you want to accept the compensation, Permanent TSB should immediately repay any arrears over charged and move your mortgage to the correct tracker rate. You should consult with your solicitor and seek advice from him or her as soon as possible.