Business Property & Mortgages

Friday 9 December 2016

AIB is next to cave in on tracker mortgages

State bank does U-turn and offers €25k write-down to one customer

Published 30/08/2015 | 02:30

AIB declined to comment on what it called 'individual customer arrangements'
AIB declined to comment on what it called 'individual customer arrangements'

AIB is giving tracker mortgages and debt write-downs or lump sums worth more than €25,000 to customers who complained that they were wrongly denied one, in a dramatic shift in policy that coincides with the Central Bank's industry-wide probe.

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One AIB mortgage holder, who struggled for years with repayments, has been put on a tracker and offered a write down in excess of €25,000 on the home loan, the Sunday Independent has learnt.

The customer claimed that they should have been offered a tracker when the fixed rate mortgage expired and lodged a formal complaint six months ago.

AIB responded days after the Permanent TSB tracker scandal broke with an offer a tracker and a write-down on the mortgage. However the bank described the offer as a "goodwill gesture" and has made no admission of liability or wrongdoing, according to informed sources.

At least three more mortgage holders who believed they were contractually entitled to the option of a tracker have also received offers from AIB in the past fortnight. The Sunday Independent has learnt that the bank has offered the customers a tracker mortgage along with mortgage write-downs or lump sums of several thousand euro. Again, the bank has denied any wrongdoing and has told the customers the offer is a good will gesture.

AIB declined to comment on what it called "individual customer arrangements".

The developments in recent weeks suggest that the state-owned bank has been reviewing its policies on tracker mortgages, since the scandal over withheld trackers erupted at Permanent TSB in July.

A Central Bank investigation into Permanent TSB found significant failures in relation to trackers, with one of the key issues being the failure to tell customers that they would lose their trackers by breaking early from fixed rate terms.

It found that 1,372 were entitled to tracker mortgages but the bank forced them to pay much higher standard variable rates. The bank has promised refunds of the amounts overcharged and compensation and upfront payments of €50,000 and €25,000 to 61 people who lost homes or properties as a result.

The Central Bank has said it is looking at "tracker-related issues" from "a wider industry perspective" but has refused to say which financial institutions it is looking at.

David Hall of the Irish Mortgage Holders Organisation called on the Central Bank to formally investigate how all banks dealt with tracker products.

"The Irish Mortgage Holders Organisation believe many others have been overcharged and there needs to be a clear and focused investigation to assist customers," he said.

"The Central Bank should immediately investigate all banks who had tracker products to establish if customers were overcharged and not given access to the appropriate rate."

It emerged last week that one couple is suing AIB, claiming they should have been offered the opportunity to move to a tracker product after their fixed rate expired, in a test case taken by the group New Beginning. It was alleged that the bank omitted to tell eligible customers they were entitled to move to trackers when their fixed-rate terms expired.

Trackers can save mortgage holders thousands of euro a year on their mortgage bill. Trackers are set at a margin above the European Central Bank interest rate which is currently at an historic low, while variable rates are at 3.8pc with AIB.

Sunday Independent

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