New probe means thousands could get trackers back
Published 03/10/2015 | 02:30
The Central Bank is to probe all banks to see if they wrongly took tracker mortgages away from customers.
Up to 10,000 homeowners may have been denied low-cost trackers, costing them thousands of euro every year in overpayments.
The new probe comes in the wake of serious mistakes unearthed at Permanent TSB in August, which cost 22 people their homes.
Permanent TSB is being forced by regulators to restore trackers to almost 1,400 of its customers and pay them compensation.
The Permanent TSB admission of wrongdoing had prompted widespread calls for an investigation into all banks.
Now the Central Bank has relented and said that it is to begin a broad examination of tracker-mortgage issues across all lenders.
It insisted that it had taken action against banks in the past that incorrectly took trackers off customers, adding: "We remain concerned that there may be other tracker-related issues which could be impacting on consumers across the system."
The bank said it was engaging closely with a number of lenders to ensure that they acted in the best interests of customers who had trackers at some point.
"We have also been engaging with consumer groups, as well as the Financial Services Ombudsman, to help inform our work. In addition, we have decided that a broader examination of tracker-related issues is warranted."
The Central Bank said it had written to all lenders, telling them of its plans to conduct a review.
Financial adviser Pádraic Kissane, who advises customers on how to get trackers back, said errors in relation to tracker mortgages by banks in the wake of the financial crisis happened at multiple lenders.
He said: "The issue of people wrongly losing trackers is systemic across the banking sector. I reckon there are at least 10,000 affected customers across all the banks."
In the summer, the Central Bank said Permanent TSB failed to inform certain customers of the consequences of their decisions to break early from a fixed rate or discounted tracker period, which saw them lose their contractual right to be offered a tracker rate in the future.
It said PTSB also failed to inform some other customers of their right to be offered a tracker rate at the end of any fixed rate period.
The affected customers are being compensated by the bank.
This newspaper has previously reported that AIB alone may have wrongly taken trackers off up to 3,000 people.
And it emerged recently that the Central Bank was warned six years ago about the scandal of banks taking valuable tracker mortgages off homeowners.
Tracker rates are a fraction of variable rates. When people opted to fix, they expected to be able to go back to their trackers but banks often denied them this option, resulting in massive extra costs.
If the probe finds banks broke the rules, fines of up to €10m could be levied.
David Hall of the Irish Mortgage Holders Organisation said he had requested the investigation and this was supported by the Oireachtas Finance Committee.
Fianna Fáil finance spokesperson Michael McGrath welcomed the industry-wide probe.
He said the tracker-overcharging issue has been a growing scandal in recent times. The Central Bank was too slow to set up the probe, he added.