‘Courts could offer far greater compensation than banks’

Q. What exactly are trackers? A. Tracker mortgages ‘tracked’ the main European Central Bank (ECB) interest rate. Typically they were set at the ECB rate plus 1%.

That was about the same as ordinary mortgages in the early- to mid-Noughties.

Their main advantage then was that they guaranteed any interest rate cuts would be passed on to borrowers.

Nobody had any idea how valuable they would become.

When the financial crash occurred, ECB rates were slashed from 4.25% in 2008 to 1% in 2009 and later to 0% in a desperate bid to stimulate eurozone economies. This transformed trackers into a bargain for borrowers and a millstone around the necks of already-troubled banks which lost money on them. Banks stopped offering trackers in 2008. Q. So how did people lose out? Some tracker borrowers had previously moved onto fixed rates. When those fixed rate periods expired, many should have been offered either the same tracker rate or another tracker rate depending on their contracts but weren’t. So they lost out big time, by as much as €500 a month in some cases. Others were put on higher tracker rates than they should have been on. Basically, the banks ripped them off. Q: How do I know if I have been affected? A: You should be contacted by your bank on foot of the Central Bank investigation. Many people who had no idea they were affected have already received cheques in compensation. The main thing is that you must have had a tracker mortgage and either lost it or were given a lessfavourable rate of interest than you should have been on. The most common cases are those who were on a tracker deal but moved onto a fixed rate and then a variable rate. Examine your mortgage contract, which your solicitor may have a copy of, if you do not. Or you could request a copy of the original contract from your lender. Q. How much should I get? A. If you lost out unfairly, you should be offered a refund of any sum overpaid plus compensation, which is usually a percentage of the refund amount. The legal eagles say compensation through the courts could be far greater than what is offered by banks through the redress process depending on your circumstances. If someone lost their home and suffered health or personal issues as a result, the compensation may be very much more than a generic percentage that the bank decided is suitable for everyone.

Trackers became a bargain for borrowers – and a millstone for troubled banks

Q: Should I have already heard from my bank if I am affected? A: Not necessarily. Not all banks have yet complied with the Central Banks direction to identify borrowers affected, let alone contact them. Q. What if I am not happy with the bank’s offer? A. You can accept it and then appeal to special independent panels being set up for each bank. You can also still take your case to the courts in pursuit of a better settlement.

Test cases against banks are being prepared seeking further compensation for those hit by the tracker scandal, in addition to whatever is offered by the banks.