Thursday 29 September 2016

Years later, the bank finally owns up

Published 04/03/2016 | 02:30

Photo: PA
Photo: PA

The capacity of bankers to engender visceral anger in the population of this country knows no bounds. The latest example of banking skulduggery comes from AIB, a bank that we taxpayers have had to stump up €21.8bn to bail out.

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The bank has been denying for ages that it has wrongfully refused its customers good value tracker mortgages.

As many as 3,000 families may have paid up to €6,000 more a year than they should have because the bank would not allow them revert to a tracker when they opted for a fixed rate for a period.

Never mind that the former financial services ombudsman Joe Meade said there was a problem across all banks in relation to trackers being denied to mortgage holders as far back as 2009.

Never mind that Bank of Ireland restored more than 2,000 of its customers to trackers, and compensated them, in 2011.

Never mind that last summer Permanent TSB came clean and said that some of the 1,400 families it wrongfully stopped going back to a tracker rate had subsequently lost their homes.

And never mind that last October the Central Bank launched an industry-wide probe of banks wilfully refusing to put mortgage holders back on tracker rates.

All the while, AIB refused to accept it has a tracker-denial problem.

It is estimated that a family with a €200,000 mortgage would have to earn €12,500, or €6,000 after tax, to cover the difference in cost between a variable rate and a tracker.

It seems that if you make a mistake then the bank makes you pay. But if the bank makes a mistake you still pay.

But yesterday the bank changed tack.

It said it was now setting aside two figures to cover tracker redress costs - €105m and €85m.

And well it might, considering it made profits of €1.9bn in 2015, up 72pc from the previous year. Customers have brought the bank back to financial health through high costs and charges.

The cost of restoring trackers and paying compensation could work out at anywhere between €35,000 and €65,000 per customer, if the expected number of 3,000 families impacted proves correct.

Taxpayers may have saved the bank, but up to now it has been very hard for the bank's customers to catch a break.

Maybe, at last, that is slowly starting to change. It's about time.

Irish Independent

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