Sunday 11 December 2016

PTSB unit fined €4.5m for denial of tracker rates

Charlie Weston Personal Finance Editor

Published 29/11/2016 | 02:30

The customers were ovecharged between €100 and €68,000, with many ending up in arrears and others being subjected to legal threats. Photo: Reuters
The customers were ovecharged between €100 and €68,000, with many ending up in arrears and others being subjected to legal threats. Photo: Reuters

A SUBSIDIARY of Permanent TSB has been hit with a massive fine for denying its customers good-value tracker mortgage rates.

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Sub-prime lender Springboard has to pay the Central Bank €4.5m, in what is one of the largest fines imposed on a financial institution by regulators in this country.

The lender did not put 222 customers back on tracker rates they were entitled to when they came off fixed rates.

The customers were overcharged between €100 and €68,000, with many ending up in arrears and others being subjected to legal threats. The average over-charged amount was €19,000.

No customers lost their homes as a result of the overcharging, a spokesman for Springboard insisted. But some people ended up being over-charged for almost seven years.

The fine is the largest ever levied.

Both Quinn Insurance and Irish Nationwide Building Societies were fined €5m each for regulatory breaches, but the fines were not actually levied as the two institutions were then owned by taxpayers.

The big fine for Springboard means that Permanent TSB and Ulster Bank, which are both subject to enforcement actions by the Central Bank over tracker over-charging, are facing much larger fines. The Bank can now impose fines of up to €10m.

This year alone the Central Bank has levied €12m in fines.

The director of enforcement at the Central Bank, Derville Rowland, said Springboard had overcharged its customers €5.8m, which has now been paid back to the customers in interest refunds and compensation.

Compensation amounts are understood to amount to 10pc of total interest that was overcharged. Tracker rates are typically set at 1pc over the European Central Bank rate, which means they are a fraction of variable rates. At one stage the Springboard variable rates were more than 6pc.

Springboard's loans have been sold to Mars Capital, but it is still a subsidiary of Permanent TSB even though it has not issued any mortgages since 2009.

Ms Rowland said the lender failed to act with due care towards its customers.

"The consequences for impacted customers were serious and totally unacceptable. All 222 customers paid more than required, some fell into mortgage arrears and some were subjected to legal proceedings."

It comes as the first batch of 2,000 Ulster Bank customers are to be written to from next month telling them they are being put back on trackers, and that they are due refunds.

And AIB has almost finished restoring 3,300 customers to tracker rates, and is due to outline details to them in the coming weeks about refunds and compensation.

The consequences for impacted customers were serious and totally unacceptable.

Irish Independent

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