Tuesday 30 May 2017

PTSB disaster sparks wider Central Bank tracker probe

Expert warns that errors in the administration of tracker mortgages happened at all banks

The Central Bank confirmed it was probing other problems with trackers beyond its immediate investigation at PTSB
The Central Bank confirmed it was probing other problems with trackers beyond its immediate investigation at PTSB
Sarah McCabe

Sarah McCabe

The Central Bank is examining industry-wide issues with tracker mortgages in the wake of serious mistakes unearthed at Permanent TSB which cost 22 people their homes, the Sunday Independent has learned.

The Central Bank confirmed it was probing other problems with trackers beyond its immediate investigation at PTSB, though it would not divulge further details.

Financial advisor Padraic Kissane, who advised many of the customers embroiled in the Permanent TSB scandal, says that in his experience errors in the operation of tracker mortgages by banks in the wake of the financial crisis happened at multiple lenders, not limited to Permanent TSB.

"I think it's an issue for every bank," he said. "Some 2,500 cases of trackers incorrectly taken from customers have already been identified between two lenders."

A separate Central Bank investigation at Bank of Ireland and subsidiary ICS led to the restoration of 2,100 trackers in 2010.

"There certainly have to be more," Kissane added.

In a statement, the Regulator said: "As part of the Central Bank's supervisory engagement with firms, where issues are identified, including tracker-related issues, they are considered from a wider industry perspective. We are looking at some tracker- related issues but are not in a position to comment on our supervisory engagement."

Unlike consumer complaints body the Financial Services Ombudsman, the Central Bank has the power to investigate actions by financial services providers which date back more than six years.

The Sunday Independent contacted three of the country's biggest mortgage lenders - AIB, Bank of Ireland and Ulster - for comment.

"As a bank, AIB of course has ongoing dialogue with our regulators on all aspects of our business. Each bank operating in the mortgage market has different terms and conditions at different points in time. The performance of these products is kept under constant review, particularly at times of market events," said a spokesperson for AIB.

Ulster Bank and Bank of Ireland declined to comment about communications with the Regulator, but Ulster said that any customers who were contractually entitled to return to a tracker rate were facilitated, while Bank of Ireland pointed to comments made during the week by chief executive Richie Boucher - who, when asked whether his bank had cases like those unearthed at PTSB, said: "If we had material disclosure of that kind, I would be making it."

Meanwhile, the final outcome of the Regulator's enforcement action against Permanent TSB is still pending. Fines of up to €10m are expected for the lender's failure to inform some customers they would lose their tracker mortgages. The bank has already unveiled a compensation package for the 1,400 affected customers, which will cost it around €76m.

This will mainly be paid for by taxpayers, since the State owns 75pc of the lender.

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