Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

On the prevailing rate issue that applies in both AIB and Permanent TSB, AIB included in its December update an additional 4,000 customers and AIB is proposing that they receive compensation of €1,000 plus €615 towards independent advice. My understanding is that this is a cohort of customers who were never on a tracker rate but were on a fixed rate of interest for a period and under their mortgage contract, at the end of the fixed rate period they were entitled to go on to a tracker rate at the prevailing rate, which is the term that was used in the mortgage contract. When they came off the fixed rate, however, they were not offered such a tracker rate because the trackers no longer existed or were not being offered by the bank at that time. Nonetheless their mortgage contract entitled them to a tracker rate at the prevailing rate. A tracker, as we all know here, is the ECB rate plus a margin. The margin remains fixed. The ECB varies in line with the ECB base rate. Will Professor Lane talk us through that issue?