Professor Philip Lane:

I think it is important to be clear about this. Those contracts specified that when one rolled off the fixed rate, the mortgage holder was entitled to a tracker loan at the prevailing rate. They were not offered a tracker mortgage. That is why they are receiving this flat rate compensation because the option of the tracker was not offered. This is why they are included and they are receiving a payment because they should have received the offer of a tracker and they did not. The second point is - and we have looked at the issue very closely because we appreciate there are many people who are very concerned about this and we are aware of different interpretations of what "prevailing" might mean to different people. Ms Rowland might wish to add to my remarks, having been to the front of concluding an agreement with the banks. There are all sorts of tracker contracts out there. Deputy McGrath mentioned the fact there is a fixed margin. That is not the case for all tracker mortgages. The margin in some of the tracker mortgages could be linked to the cost of funding to the banks. The trackers were not offered, when they should have been offered and then the question is, at what rate would the bank have offered a tracker under these contracts at that time, if they had made the offer? This is where the calculation the Deputy is seeing is that they are being offered trackers at more than 3% because that reflected the cost of funds to the banks after they shot up after the crisis. By the autumn of 2008, if the bank were to offer tracker mortgages at the prevailing rates, they would have offered trackers at significantly higher rates. The point is that these were not trackers that promised a fixed margin over ECB. We went through this in great detail because we were always looking to make sure that from a consumer's perspective we had checked every angle, looked under every corner of this. When we looked through this with our experts, the conclusion was that was what would have happened if they had been offered a tracker. It would have been an expensive tracker. These were not fixed margin over ECB. These were trackers where the margin could vary. This is why we have ended up in this situation. I will make one more point and then I am sure Ms Rowland can add to this. The fact that they are in the examination, are being contacted by the banks and are receiving this offer means that the independent appeals mechanism is open to them. If they believe that this is not adequate, they have the full access to the independent appeals mechanism to challenge it if they believe this is not sufficient or appropriate. As with all mortgage holders, the ombudsman and the courts remain open. It is essential that we put them into the examination because they are receiving this payment because they should have been offered a tracker and they were not. In addition, if they believe this is not appropriate to their individual case, they can bring forward an appeal. Ms. Rowland led this work and maybe she will elaborate.