Sunday 4 December 2016

Permanent TSB overcharging: Borrowers get 'insulting' offers of up to €50,000, 22 families lose their homes

50,000 compensation offer branded 'insulting'

Paul O'Donoghue and Sarah McCabe

Published 29/07/2015 | 02:30

Permanent TSB chief Jeremy Masding at a press conference yesterday to discuss the mortgage redress programme. Photo: PA
Permanent TSB chief Jeremy Masding at a press conference yesterday to discuss the mortgage redress programme. Photo: PA

The head of Permanent TSB was facing calls to resign after overcharging at the bank cost at least 22 families their homes.

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Borrowers affected by the bank's errors were told to seek expert advice before accepting an offer of up to €50,000 in compensation, an amount that was described as "insulting".

PTSB, which is 75pc State-owned, will have to set aside at least €80m to cover the cost of potential fines and compensation. No one in the bank has yet been identified with any wrongdoing.

The bank is offering €50,000 in compensation to people who lost their homes as a result of being overcharged mortgage interest for five years or more. Less severely affected customers will be paid as little as €3,500.

Padraic Kissane, a financial adviser who is assisting many of those affected, urged people to get independent advice before accepting any offer.

"You can't quantify what this has meant to people. If you were overcharged by €400 a month, you had to earn an extra €800 a month to pay it, because of income tax. We won't know what affected customers will get until we start seeing individual offers, but it will be very difficult to compensate for the damage this has caused."

Current PTSB chief executive Jeremy Masding was not at the bank when an initial overcharging error affecting 1,372 customers first occurred.

However, David Hall of the Irish Mortgage Holders Association said the bank's handling of the cases was "a disgrace".

He said Mr Masding should step down over the decision to fight customers all the way to the Supreme Court - even after the Financial Ombudsman and the High Court found against the lender.

Despicable

The legal actions continued into this year, delaying settlement of the cases while customers continued to be charged the higher interest rates.

Mr Hall said: "1,400 people have been treated terribly by a State-owned bank. Offering €50,000 to people who had their homes taken from them is despicable.

"How do you compensate people for stress and the fear of losing their home? Not with €50,000. I would be recommending people not to accept such an insulting offer."

A spokeswoman for the Department of Finance refused to comment when asked if the department had confidence in Mr Masding's position as PTSB CEO. PTSB said it held monthly shareholder meetings with the department and "kept them appraised going through the journey".

Mr Masding said that he stood by his track record in the company. The overcharging was a result of an error, he said.

"I can find nothing to suggest that individuals or a group of people took a conscious decision not to provide the information to our customers which should have been provided to them when they contacted the bank."

It is estimated that PTSB could end up paying out €76m in compensation to customers and could be hit with fines by the Central Bank of up to €10m.

It emerged that just under 1,400 mortgage accounts with PTSB and its subsidiary company, Springboard Mortgages Limited, are due to receive the compensation following the long-running mortgage disputes.

The customers' contracts entitled them to tracker mortgages but, as a result of action by the bank, they ended up forced to pay much higher standard variable rates for five years or more. This difference could be €5,000 to €7,000 a year.

The higher repayments were identified as being a "key factor" in at least 22 cases of people losing their properties, although an appeal panel may find this to be the case with more.

Some 39 other affected customers have also lost their properties, but the bank said it had not yet established whether its failures were a primary factor in this. PTSB said if its failure was a key factor in the customer losing the property, any outstanding amount on the mortgage would be written off.

Mr Masding said these write-offs could be worth "hundreds of thousands of euro". The bank estimated it will pay an average of €25,600 per account at PTSB and €23,300 per account at Springboard.

Irish Independent

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