Bank of Ireland climb-down over 'tracker switch' letter
Bank of Ireland has sent a letter to its thousands of tracker mortgage-holders, apologising for encouraging them to move to a fixed rate.
The letter says the bank was told to do this by the Central Bank.
It outlines a number of specifics on the consequences of giving up a tracker that should have been in the original letter but were not listed.
Being forced to send a new letter represents a humiliating climb-down for Bank of Ireland boss Richie Boucher, financial experts said.
Ditching a tracker for a fixed rate could see repayments rise by €300 a month for a typical mortgage-holder as trackers are the cheapest mortgages in the country.
The Irish Independent discovered last month that the state-rescued bank had written to all its mortgage customers telling them it had lowered its fixed rates.
Bank of Ireland was accused of acting in an underhand way by including those on tracker mortgages in the mail shot.
The letter made no mention of the cost and implications of giving up a tracker. This contravenes Central Bank rules.
Despite this, the bank had denied to this newspaper that it was being probed on the issue by the Central Bank and insisted it had done nothing wrong.
Now the latest letter, sent to tracker-holders, seeks to clarify the one sent in June.
The new letter states: "We are now writing to you at the request of the Central Bank of Ireland to apologise for this communication, which should not have been issued to tracker mortgage customers without setting out the key information and consequences of switching from existing tracker interest rates."
It says any decision to move from a tracker rate should only be made after carefully considering the consequences.
Financial expert Frank Conway of the Irish Financial Review said the bank had been clearly been wrong to send the original letter. He said the new letter represents a humiliating climb-down for Mr Boucher.
"Who knows what the bank was thinking? Perhaps it was a deliberate effort to trick customers off their tracker mortgages, or perhaps it was a big screw-up at their data centre," said Mr Conway.
A spokesman for the Central Bank said the first letter should not have been issued to tracker mortgage customers without setting out the key information and consequences of changing from a tracker.
Bank of Ireland said it is committed to acting at all times in the best interest of its customers, within both the letter and spirit of the Consumer Protection Code 2012.