Business Bank account Decision Reference 2021-0279

Case OutcomeUpheld
Subject MatterBusiness Bank account
Date19 August 2021
Conducts Complained OfFees & charges applied
Finantial SectorBanking
Decision Ref:
Product / Service:
Business Bank account
Conduct(s) complained of:
Fees & charges applied
The Complainant is a private limited company and this complaint is brought on its behalf by
its directors. The Complainant restructured existing loan facilities pursuant to a Letter of
Offer dated 23 June 2010. These facilities were restructured again pursuant to a Letter of
Offer dated 29 February 2012. The Complainant defaulted in its repayment obligations and
surcharge interest was applied to the loan account by the Provider. The Complainant
disputes the Provider’s entitlement to charge surcharge interest in respect of these facilities.
For the purpose of setting out the position of each party to this complaint, it is important
to note that the parties have separately indicated that the submissions made in the course
of a linked complaint, connected to the parties, apply equally to this complaint.
The Complainant’s Case
The Complainant states that the Provider applied surcharge interest to a loan account
totalling €50,880.10 including compounding. An Interest Audit Finding dated 25 April 2018
prepared by the Complainant’s representative has also been furnished. The Complainant
argues that the Provider is now refusing to refund the surcharge interest despite numerous
legal rulings on the charging of this type of interest.
In a letter dated 17 January 2019, the Complainant’s representative has referred to three
High Court decisions: ACC Bank plc v Friends First Managed Pensions Funds Limited [2012]
IEHC 435; AIB plc v Fahy [2014] IEHC 244; and Sheehan v Breccia [2016] IEHC 67, stating
that all three deal with the issue of surcharge interest.
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It is also pointed out that in the course of correspondence with the Provider, the
Complainant’s representative asked whether the surcharge interest rate applied to the loan
was negotiated with the Complainant and was a genuine pre-estimate of probable loss or a
generic rate.
Referring to the Provider’s response letter dated 5 February 2018, it is submitted the
Provider clearly states that the surcharge interest rate (of 0.75% per month, or 9% per
annum) was ‘never open to or subject to negotiation by the Company and apply to all loan
facilities provided by the Bank’. It is further submitted this confirms the interest rate applied
to the loan was a generic interest rate and a penalty, and was therefore, unenforceable.
In a letter dated 7 March 2019, the Complainant’s representative explains that it sought to
identify whether the surcharge interest applied to the loan met three criteria, as set out in
the various judgments, stating:
1. The interest rate applied was not negotiated with the Complainant;
2. The surcharge rate applied (9% per annum) was a generic rate contained in the terms
and conditions; and
3. The surcharge interest rate did not represent a genuine pre-estimate of loss arising
from default.
It is submitted that the Provider has failed to show the interest rate applied was a genuine
pre-estimate of probable loss, and that it was negotiated with the Complainant and not a
generic rate.
In resolution of this complaint, the Complainant wants a refund of the surcharge interest
applied to the loan and reimbursement for all professional costs and expenses incurred in
resolving this issue. In particular, paragraph 127 of the decision of Haughton J in Breccia has
been cited as summarising the crux of this complaint.
The Provider’s Case
The Provider wrote to this Office on 19 February 2019 requesting that it decline to
investigate this complaint pursuant to section 52(1)(f) of the Financial Services and
Pensions Ombudsman Act 2017 (the Act) on the basis that the subject matter was of such a
degree of complexity, the courts were a more appropriate forum to determine the dispute.
The Complainant disagreed with the Provider’s position on the matter as outlined in its letter
of 7 March 2018.
By letter dated 27 March 2019, the Provider addressed the matters arising in this complaint
under three separate headings: (i) Accord and Satisfaction; (ii) Limitations Periods; and (iii)
Specific Issues Raised by the Complainant.

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