Ulster Bank/First Active Offset mortgages, here's the answer to previous thread!

aoraki

https://www.boards.ie/discussion/comment/121436464#Comment_121436464

I was looking at that version of the Terms and Conditions last night. One thing that struck me is that they make a distinction between "Offset Arrangement" and the accounts that go into the arrangement, it's like they treat them as two separate entities or concepts. There is a section called "When we can make changes to the Offset terms and conditions" and in that section they say they can "remove existing features, existing services or existing products from the Accounts or from the Offset Arrangement".

It's a tad ambiguous. Nowhere in the T&Cs does it mention anything about removing, disabling or rendering defunct the "Offset Arrangement" itself. I mean, technically, they can remove all the eligible products that can go into a Offset Arrangement, but that would render the Offset Arrangement defunct. Sounds that that would run counter to the spirit and purpose of the account (the clue is in the name - Offset Mortgage!).

But I don't know, I am not in any way versed in legal matters or contract law.

fliball123

https://www.boards.ie/discussion/comment/121436552#Comment_121436552

This is the key aspect of this mortgage and is the differential between this and the bog standard tracker mortgage removing this key item can only be seen as a breach of contract. But like you I am a layman in this matter and I think there will have to be a legal challenge

kenif

"to remove existing features, existing services or existing products from the Account;"

The above line in in part C section 24 which covers the offset flexible mortgage is the part you would need legal clarity.

But to me, to remove existing features services or products reads like they can do whatever they want.

Jim2007

https://www.boards.ie/discussion/comment/121436391#Comment_121436391

I am not going to speculate on what the parent company nor who every is appointed as ultimate liquidator will do as that is against our rules, but as someone who has held senior positions at two European banks and worked as an insolvency practitioner in Ireland, get proper legal advice because your hand is not nearly as strong as you think it is.

kenif

https://www.boards.ie/discussion/comment/121436681#Comment_121436681

The T&C's also state a change in market conditions. They are leaving the market, I don't think there is a bigger change than that.

Don't get me wrong, I'd like more, I don't think their predictive curve is fair. But I also think they have gone above and beyond what they legally had to.

aoraki

https://www.boards.ie/discussion/comment/121436711#Comment_121436711

The Yield curve is something that I would have questions on. Is that something that is published publicly that we can access somewhere? I haven't gotten a letter yet so I haven't seen for myself what level of detail the letter contains, but I believe it's not much, I don't think they even include the interest rate used in the calculation. I'd be wondering also if they are they applying the same interest rate to every customer, regardless of what term they have remaining. @kenif you mentioned that it looks like they used a rate of 4%. If that's the case, I'd like some transparency on how they came up with that.

But I'll be directing that question to UB.

kenif

https://www.boards.ie/discussion/comment/121436767#Comment_121436767

It looks like it averages out at 4%, in particular for longer terms. But it's not actually 4, it will change from year to year I GUESS. Shorter term might get a higher interest calculation give where rates are now. I've tried look them up but only really found for investments/bonds.

fliball123

https://www.boards.ie/discussion/comment/121436711#Comment_121436711

Is it fair? Sit back and think about it, I mean how can they use a predictive curve for interest rate that they are using so based on a prediction and with the best will in the world the markets cant even predict this the best guess is what we are currently paying not the 4% that is being used and then base the amount of goodwill/compensation you will be getting from the past and not looking at the facts that people are in the round about 20 years older than when the mortgage started so they are now closer to retirement (lump sum) with their parents closer to the average age for life expectancy and in a lot of cases over it (meaning inheritance), that in itself will leave this arrangement open to a court case. They cannot use something in the past for one metric and one in the future for another with out there being a conflict with regards to their paradigm for calculating what is basically a breach of contract. If they could of done this legally they would of done so years ago. Sure the argument could be made they plucked the figures for these out of their asses or in order to minimize the payout they will be on the hook for.

kenif

https://www.boards.ie/discussion/comment/121436958#Comment_121436958

Sorry fitball but I don't believe ringing Ulster Bank and telling them that we think they are being unfair. Or questioning their "Market Standard" tools will do any good. I think we can already predict their answers.

It's time for legal advice... But be careful, try get from free sources first. A consultation will cost you. You might get a solicitor to take a case, maybe out of principle more than point of law but that will definitely cost you n maybe more than your goodwill payment.

I don't think you can go class action in Ireland it would have to be a test case n who is willing to take that on?

I hope you are right in your points, and I wish you well but I honestly believe Ulster Bank have gone through this legally and with central bank kept informed. They would have checked over this.

Maybe start with them or regulator. Focus your attention there first.

Silpac

Anyone else got offers to share, I think that would be most helpful. Hypothecation litigation points are a waste of time.

I got offered 12.5k.

McSween

If we could confirm re the taxation it would be good. If anyone has checked it out

WhatsGoingOn2

Still haven't got the letter, going to ring them later to see what the story is. Obviously there are a few people unhappy here, but does that mean the vast majority of people are happy? There are 4500 customers, and only a handful complaining here.

fliball123

https://www.boards.ie/discussion/comment/121437215#Comment_121437215

So just shut up and take it even if this means that some people will be paying out a lot more meney over the lifefime of this mortgage then they could have if the offset mortgage was still there? Questions have to be asked and as I say basing a figure using one element on trends from the past and element a mere prediction from the future and then not taking into account other future events that may happen will be challenged I have no doubt about it

kenif

https://www.boards.ie/discussion/comment/121437415#Comment_121437415

https://www.askaboutmoney.com/threads/are-ombudsman-rulings-bank-goodwill-gestures-deemed-taxable-income.229769/

i found this but not exact confirmation. Does mention goodwill

aoraki

https://www.boards.ie/discussion/comment/121437446#Comment_121437446

Nobody is suggesting shutting up and taking it. If you have an issue with the offer or the process, by all means take legal advice, talk to a financial advisor and the likes of the financial regulator. Repeating the same points over and over again on a platform like this is not going to get you anywhere.

fliball123

https://www.boards.ie/discussion/comment/121437469#Comment_121437469

I will be honest I have yet to receive my letter but I can understand why some here are p1ssed off with some of the offers and I am putting up arguments that people can use when ringing Ulster bank. Also legally using a figure based on a future prediction for the interest rate sets a precedent that when calculating this amount Ulster bank has used "the future" and future events have been taken into consideration when calculating that rate ergo they cannot discount future events when it comes to the amount of money in someone's offset facility for the duration of the mortgage its akin to cherry picking the figures to suit the narrative of paying out less then they would have to. So yeah I am repeating myself as I see this a huge hole for Ulster bank when it does come time for some to go down the legal route. I may not be one of them it depends on what offer they make me

fliball123

Anyone who got the letter does it state the average in your offset account for the 2 periods mentioned?

TheAngryTechie

I’m with you on this but I’m sure they’ve looked at this legally

UB will provide you with a game of football however we reserve the right to remove any element of the game I.e. the football, the referee, the goals

Now it’s not a game, it’s just grass with lines marked out 😂

kenif

https://www.boards.ie/discussion/comment/121437492#Comment_121437492

But there is no mention of compensation in the T&C's. So legally as you say they could do this and offer 0. But neither me or you are in law so what we say won't win a case in court.

The fact that they are compensating to the tune of 58million is why I think this has all been signed off by the powers that be. So I plan of focussing on checking they used all the correct figures and getting financial advice on how to best proceed with what they have said I will receive.

kenif

https://www.boards.ie/discussion/comment/121437492#Comment_121437492

If you do ring, escalate the call as quick as you can. Otherwise you will just be talking to someone reading off a script.

TheAngryTechie

It sees to me that the FA t&cs make it clear that they can remove any amount of elements from the arrangement so not sure if we have a leg to stand on.

it would need a legal review

fliball123

https://www.boards.ie/discussion/comment/121437654#Comment_121437654

Once again legally this element is its defining term/condition, could there be a case of false advertising in that they should of named it an "Offset Tracker but we can remove this at any stage in the future without consequence Mortgage " It is what separates it from being a bog standard tracker mortgage

kenif

There's bound to be a law section on boards.ie. Pop the question up there n see if someone with more knowledge than us comes back.

Jim2007

https://www.boards.ie/discussion/comment/121436958#Comment_121436958

You keep talking about this as if there will be a going concern which you will be able to deal and negotiate with and that almost certainly will not be the case. National Westminster Bank have made their provisions to exit the market, they will not be subject to CBI nor the ECB on this going forward, consequently their only interest is to stick to those provisions. And they have the means to do this and nothing in what you have said will make the slightest bit of difference, event you reference to breach of contract, if they go down the road I have in mind. If you stand to loose a significant amount of money on this you need to get proper legal advice on the twists and turns that this may take so you are fully aware of the possibilities in making your decision. And we are not going to speculate on the possible actions of a financial institution on this forum.

paneur

According to the information letter in the section called ..

"What else do I need to know ? " 🙄.

It states.. your mortgage will remain with ulster bank , but is likely to be sold in the future..

Could it be that they still haven't managed to sell these loans as there is not enough profit in them ..

Thoughts???

If so why not offer a reduced redemption figure ..??

kenif

https://www.boards.ie/discussion/comment/121437873#Comment_121437873

Effectively they have for so many. So many on here that are fully offset n now getting a payment. They can clear n be left with that payment. Or anyone can use their payment and put it toward paying off their mortgage if they have other funds.

The loan value is 477million now... Be interesting to see what it is when it comes time to sell.

If even then they can sell. There could still be a lot to play out here. Thes loans could end up with a receiver.

Jim2007

https://www.boards.ie/discussion/comment/121437563#Comment_121437563

Probably the most sensible approach. And yes the 58m almost certainly has been signed off on and included in the 315m provision listed in the financial statements released in Feb. I think it was. I have not got the motivation to dig through all the financial information they released on this. Perhaps someone else will.

fliball123

https://www.boards.ie/discussion/comment/121437856#Comment_121437856

Well if they did take that action then the mortgage holder could tell them were to go for the remainder of the mortgage and in Ireland as a country we don't do repossession of the family home history has shown that some people are living with out paying a mortgage payment for 10 years + and if they are outside the ECB or CBI like you say who can they go crying too? IMO by not dealing with peoples concerns they have a lot more to lose.

phormium

https://www.boards.ie/discussion/comment/121437873#Comment_121437873

They didn't manage to sell them already because of the problem with the offsetting, no bank could or wanted to facilitate that set up. However now they will be selling just one account, the mortgage, no attached current/savings accounts. Yes there will a few conditions on it that the new buyer will have to adhere to but it becomes just a basic tracker mortgage so much easier to offload I would imagine.

ibyrne

It seems to me that they are a few issues (just my opinion - I am not in a legal or financial profession):

1. Whether legal or not, the scale of change to the product effectively makes it a product that nobody signed up to. It would seem unfair if those changes also caused financial harm to the original customers.
2. While doubling the ex gratia payment sounds great, there are two problems with it: Firstly, if there is a tax implication, the doubling will be eaten up and therefore does not take into account future events, it simply pays the tax. In this case the customer looses out financially. Secondly, for customers who have not taken advantage of offsetting to this point, the doubling is like saying who have saved zero up to this point, but we will double it. Again, in all likelihood, future events (e.g. retirement or inheritance) would have a much greater effect. Again in this scenario the customer looses financially.
3. It is hard to believe that these payments are 'Goodwill' payments. There must be a good business case to make them.
4. Using historical data on how much you have offset, when the interest rates have been close to zero at a historic low to the point of making offsetting not necessarily the best use of your money, seems flawed. Now that the interest rates are rising you would expect more people to re-direct money to offsetting if they can. Again with the method used the customer looses financially.
5. The fact that on their web site they have an instruction to call them after you receive your letter if you have a lump sum due to arrive before they close the current accounts sounds like they will then re-calculate your ex gratia payment. Not sure if anyone has done this yet? If they do re-calculate it, is it really an ex-gratia payment or a compensation?

Anyhow, I am still to receive my letter. I'll post on here the figures once I get it.

fliball123

https://www.boards.ie/discussion/comment/121437997#Comment_121437997

A good starting point there also needs to be a commitment that the mortgages will not be sold to a vulture fund

paneur

Well I for one , will not be making any further mortgage payments after receiving the "ex gratia " or go quietly payment !!

I will not be engaging with the new bank / vulture fund. ...

They can talk to my solicitor or mabs..

I will not be giving ulster bank my new bank details which they say you MUST do to close your account...

I'll withdraw funds before due date and leave them a euro ."ex gratia "...

Yes , they can come after me , but that's gonna take some years...

They can ruin my credit rating, but I'm beyond caring....

In that time I will put my mortgage payments aside ....

When it it comes to negotiation I'll have that fund to play with and make a "reasonable " offer...

Sick of being shafted by service providers, banks , insurance etc...

Rant over..

Feeling better now 🙂

fliball123

https://www.boards.ie/discussion/comment/121438201#Comment_121438201

I take it you got your offer did you engage with the process??

paneur

Yep an it wont cover interest i could be avoiding...

I don't believe this pay and withdraw is of any use either.

Don't see any point in tryin to negotiate with ulster they wont be for turning..

Have sent first active terms and conditions along with letter to solicitor just for her opinion...

TM

https://www.boards.ie/discussion/comment/121438167#Comment_121438167

Why does it matter? They're trackers so the margin will remain the same no matter who services the mortgage.

Silpac

https://www.boards.ie/discussion/comment/121438167#Comment_121438167

No

paul321123

Sorry for the delay in replying, I have approx 7. 5years left on my mortgage so 45% of what is left is a OK for me, again I'm not 100% sure how the calculation was made but I'm sure the length of time that you were offsetting had something to do with this.

Jim2007

https://www.boards.ie/discussion/comment/121437939#Comment_121437939

They have noting to loose because they are not going to be around. It's your money that is on the table and I hope for your sake it works out for you.

DB2023

I've still to receive my letter so someone with greater knowledge might be able to help me. If I have a 100k mortgage and it's 100% offset, can I just move this to the new mortgage facility, continue to pay no interest and continue to pay off the loan each month? Thanks

kenif

Won't be able move all of it or mortgage will be paid off. Question is can you reduce your loan to maybe 1K and spread payments over the remainder of the term.... How many years left?

Silpac

No you can't do that. If you 100k mortgage and offset with new mortgage by say 60k, you will pay net of 40k, but you do not have access to the 60k.

You can however redraw it back but that the new "facility". And it will reduce. So it's nothing like what it was bit it is better than paying off mortgage in that you have opportunity to reborrow it.

aoraki

I am wondering the same thing @DB2023. Using a single account I don’t know how you separate the outstanding mortgage account with the money that is offsetting it. I don’t know if you can fully offset the mortgage balance without triggering a redemption. It just sounds like an awkward arrangement and to get your money out I think you need to write to them.

I don’t want to pay Ulster Bank a red cent in interest, but this sounds like too much hassle on the face of it.

kenif

Can you then spread the payments over the full term. Say 1K for over 10years. Very minimal repayments just to keep the option open for this loan so long as the facility lasts.

It is a question I will have for UB but won't be ringing till next week some time.

Uatstau

I'm struggling with the logic on this. Can anyone help? In the letter they say "We acknowledge .... that interest rate changes are by their nature unpredictable. To take account of this, we have doubled the payment to you." This is fair enough. Factor 2 should take account of most reasonable scenarios. But then they say "subject to your goodwill payment not exceeding the full amount of future mortgage interest you are expected to pay". Huh? But this 'expected to pay' depends on the predictable nature of the interest rate, which in the previous clause they have admitted might have a margin of two fluctuation.

aoraki

https://www.boards.ie/discussion/comment/121441141#Comment_121441141

Yeah, it's contradictory, I struggled with that myself. They're saying "Yeah, we've picked a best-guess interest rate to calculate your potential future interest payments. We acknowledge that it's a best guess and could be wrong so to compensate for that we will double the payment, so long as it doesn't exceed that value we got using our best guess".

In a scenario where you are not fully offsetting your mortgage, you will get the doubling effect applied to your payment. However, in a scenario where you are 100% offsetting, there is no doubling or uplift applied to your goodwill payment to acknowledge that the rate used might be wrong. It's a case of "this is the goodwill payment using our best guess rate, like it or lump it"

kenif

And they had to pick some ceiling.

fliball123

Anyone further along with valid complaints about their offer?

IC2023

Are you struggling with the calculation methodology. I think it was based on the average amount you had in your in your offset account over a period of time and time left on your mortgage and their suggested 4% rate

example

50,000 in offset account

their suggested rate 4% (interest rates currently higher but expected to go down 2023, 2024 with decreasing inflation)

term left on your mortgage example 15 years

50,000 * 4% * 15 years = 30,000

they double this to factor that rates can go up and that you may have increased the amount in the offset account in future due to windfall events

30,000 * 2 = 60,000

ex gratia payment 60,000

i think this is pretty fair. It’s not money for nothing - we lose out on this benefit going forward but ex gratia payment makes up for it If you were a heavy user of the offset

this roughly works out for me

the problem is if you didn’t use it heavily, didn’t have a large balance in it and if you don’t have a long term remaining on your mortgage you’re not going to benefit as much as others who did

fliball123

https://www.boards.ie/discussion/comment/121441304#Comment_121441304

Are you sure about this calc?

IC2023

this is from RTE website Mon 27 Nov 6:11pm

customers losing the offset feature and therefore the opportunity to use it over the remaining terms of their loans, Ulster Bank will make ex-gratia payments to each of the 4,500 customers around January 10th of next year.

It will be based on their previous use of offsetting over the past six years and their average offsetting balance over the last two years, as well as what they might have saved in future interest if they were to retain the same offsetting balance until they have cleared their mortgage.

The end figure will then be doubled, in recognition of the possibility that the customer’s offsetting balance might increase unexpectedly in the future, like through the receipt of inheritance or a redundancy payment for example.

it more or less works out for me.