Real risk of further mortgage problems, PTSB warns Noonan
Letter sent by chairman Alan Cook to Finance Minister suggests bank suspects further issues will 'impact customers', writes Sarah McCabe
Published 29/11/2015 | 02:30
Permanent TSB officials suspect there are further serious problems with the bank's mortgage products beyond the tracker mortgage scandal that saw 50 people lose their homes.
Correspondence between Permanent TSB's chairman Alan Cook and Finance Minister Michael Noonan in mid-September show the bank admitting there is "a real risk of further customer-impacting issues", prompting it to undertake "a comprehensive review of all our mortgage products".
"The board recognises that, given the complexity of the group's legacy systems, legacy industry practices and the range of products that were available pre-2012, there is a real risk of further customer-impacting issues," wrote Alan Cook to the Finance Minister on September 15.
"Senior management are preparing plans to undertake a comprehensive review of all our mortgage products, under the direction of an ExCo [executive committee] member.
"It is important that we identify and manage any such issues, both for the benefit of our customers and shareholders. Management will brief your officials once these plans are finalised".
The letter was sent two months after PTSB and the Central Bank announced a compensation package for thousands of mortgage customers, whom the lender had failed to inform of their right to revert from a fixed mortgage to a tracker mortgage, as agreed.
The bank admitted that its wrongdoing led to some customers making higher repayments, falling into arrears, incurring costly legal fights and, in dozens of cases, losing their houses.
Mr Cook was responding to a letter sent to him by the Finance Minister earlier in September.
The letter expressed Mr Noonan's disappointment at the programme set up by Permanent TSB to provide redress and compensation to affected customers - its Mortgage Redress Programme (MRP).
"I am disappointed at the cost and reputation damage the MRP has caused Permanent TSB and the distress to your customers after a period in which substantial progress had been made on many fronts," the minister wrote.
The correspondence was released following a Freedom of Information request by the Sunday Independent to the Department of Finance
Both letters were heavily redacted, while other files were refused. The Sunday Independent is appealing this decision.
The Freedom of Information request also revealed that the Department of Finance co-ordinated with Permanent TSB on media matters surrounding the Mortgage Redress Programme, both before and after it was announced in July.
Permanent TSB's internal probe is not the only review of a bank's mortgage book under way.
The Central Bank is conducting an industry-wide examination that is expected to last into 2017. The bank has embarked on "a broader examination of tracker mortgage-related issues, covering, among other things, transparency of communications with and contractual rights of tracker mortgage borrowers," the regulator said.
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