Saturday 1 October 2016

Homes lost in overcharging scandal may be returned

Paul O'Donoghue

Published 30/07/2015 | 00:00

PTSB chief executive Jeremy Masding (left), who has faced calls for his resignation, yesterday repeated his apology for the failures of the bank
PTSB chief executive Jeremy Masding (left), who has faced calls for his resignation, yesterday repeated his apology for the failures of the bank
Jeremy Masding, chief executive of Permanent TSB at the bank’s headquarters in Dublin

Permanent TSB has admitted it may have to return some of the homes lost by customers as a result of the mortgage overcharging scandal.

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The State-owned bank also acknowledged that it must set aside as much as €119m to cover the cost of what it called "legacy legal and compliance issues".

It has now emerged that some of those people who lost their properties may be able to get them back. A spokesman for PTSB said that the bank is currently in possession of a "small number" of properties that were repossessed.

He said: "Some are still in the possession of the bank. The bank would be willing to consider returning properties [but] it will fall on the basis of discussions with customers and we will explore all options with customers."

As a result, a small number of the 61 borrowers who lost their properties after the bank wrongly forced them onto higher interest rate mortgages could get their properties back.

On Tuesday, PTSB, which is 75pc State-owned, announced a redress programme for 1,372 borrowers after a Central Bank probe revealed a series of failures. It found customers were wrongly blocked from availing of low-cost tracker mortgages. The difference between a tracker rate and variable rate could be €5,000 to €7,000 a year.

At least 22 people lost their houses as a direct result of the bank's failing. A further 39 people also lost properties, although PTSB has not yet established whether its failures were a primary factor in this.

The bank is offering compensation of €50,000 to people who lost their homes, while buy-to-let investors are being offered €25,000. But the offer was branded "insulting" by some.

Customers will be able to accept settlements from PTSB and still take a case to an independent appeal panel or to pursue legal action.

Permanent TSB will shortlist the people who will make up the appeals panel for customers who are unhappy with the settlements on offer - although the Central Bank will have the final say on who is appointed.

Financial results released to the markets yesterday show that Permanent TSB has set aside €119m to cover the costs of what it called "legacy legal and compliance issues", the bulk of that is thought to relate to the costs of compensation, legal fees and potential fines.

PTSB said that it is looking for a resolution to the mortgage issues as soon as possible.

It is understood that about €65m of the €119m will be spent on the mortgage redress scheme. Total compensation for customers, excluding those who lost their properties, will come to about €35m. It is understood that another €20m could be spent on further costs, such as the appeals process. PTSB could also face a fines of up to €10m from the Central Bank.

The PTSB chief executive Jeremy Masding, who has faced calls for his resignation, yesterday repeated his apology for the failures of the bank.

Irish Independent

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