Errant bank warns ‘Get your house in order’

Get your house in order or we’ll stop cashing your cheques, Bank of Ireland told Dungarvan businessman David Walsh in Jan 2009.

Errant bank warns ‘Get your house in order’

His overdraft was to be cut from €100,000 to €65,000 and the bank was threatening not to honour standing orders on his business accounts.

He was horrified that the bank he had dealt with since he started his well-known schoolbook and office supply business with his wife Ursula in 1983, was now putting his livelihood in jeopardy.

David Walsh is typical of thousands of businesspeople in small towns all over Ireland. Highly respected, with no airs and graces. A man who would do you a good turn if he could, but, for all that a tough businessman.

He wouldn’t wrong you, but “by Jaysus don’t wrong him”.

Bank of Ireland picked the wrong man. The bank was right that someone needed to get their house in order, but it was not David Walsh of Main St, Dungarvan, it was the bank.

David Walsh went to war and with the help of his solicitor Gerard McCullagh of McCullagh Higgins & Co and the regional manager of accountants FDC Group, Vincent Hayes, he unearthed a litany of mistakes by Bank of Ireland. David Walsh ended up getting back €33,000 in interest overpayments and reduced his annual repayments bill by €30,000 a year. That was a €63,000 turnaround for his company, Office School and Computer Supplies Ltd, in less than 12 months. It meant he stayed in business.

The Financial Services Ombudsman awarded him €2,500 in compensation on top of the repayments but David Walsh wanted more than the €2,500. It only covered a small portion of his outlay in fighting the bank and he went to the High Court looking for justice.

His trouble arose from the fact that Bank of Ireland does not automatically cut standing order payments when interest rates fall. They do so for normal residential mortgages.

David Walsh wanted an order compelling the bank to automatically adjust repayment orders on commercial mortgages and loans when interest rates changed. In the High Court Mr Justice John Hedigan affirmed the decision of the Ombudsman and awarded costs against Mr Walsh.

The Ombudsman’s decisions are secret and he can only reveal cases in broad outline and cannot “name and shame” institutions when they are found to have acted improperly, as Bank of Ireland was in David Walsh’s case.

By challenging the Ombudsman’s decision in the court, David Walsh brought his case into the public domain.

“If this can help one person, just one person from going out of business or doing something stupid, then this will all have been worthwhile,” Mr Walsh told the Irish Examiner.

FDC Group’s Vincent Hayes says there are many more people out there in the same position as the Dungarvan businessman.

“It is fair to say that had this problem not been identified and resolved, our client would be out of business well before now. It is very important for all self-employed people to be aware that this is not an isolated problem.

“The facts are that none of the major banks are operating a computer system whereby repayments change when interest rates change on commercial loans, so the problem is widespread, in our opinion,” Mr Hayes said.

Mr Hayes said at the start of this saga in 2009 they took an in-depth look at potential cash-flow savings in David Walsh’s business.

“We identified the commercial loan overpayments as being a significant contributing factor to cash flow pressure. We contacted the bank who were not enamoured by our request for the figures to be calculated and even suggested our client would be charged for the privilege.

“Eventually, we agreed a refund of overpayments in the sum of €33,000 which covered the period from 2001-2008. In simple terms, because the bank was either unwilling or unable to operate the same system for commercial loans as they do for home loans, our client’s overdraft facility became a problem, caused by the bank itself.

“In addition to the refund obtained, the repayments going forward were reduced by over €30,000 per annum, giving major breathing space to the business.”

After the court case, David Walsh said: “I caught the bank with their hand in my pocket, I asked Mr Justice Hedigan and the Ombudsman to ask or to direct them to remove it, but they both said carry on. So much for justice.”

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