BofI hasn't launched an internal probe into tracker overcharging
Bank still in the dark as it prepares to pay out €25m in compensation
Bank of Ireland yesterday admitted it has yet to understand how it overcharged thousands of tracker mortgage customers even as it prepares to pay out up to €25m in compensation by Christmas.
Liam McLoughlin, the group's head of retail banking, made the admission in a lengthy appearance to the Oireachtas Finance Committee.
Flanked by the bank's head of group customer operations, Stephen Mason, and Pat Farrell, head of group communications, he confirmed no internal investigation is under way.
Mr McLoughlin said instead the focus has been on rectifying the problem and "putting customers back on the right rate".
Under questioning from the committee's chairman, TD John McGuiness, Mr McLoughlin confirmed that redress and compensation payments will "kick off" within the next few weeks.
As the bank reported to the Central Bank at the end of September last year, 602 customers entitled to the low-cost mortgages were denied a tracker rate, while 3,654 were over-charged by an average of 0.15pc.
Asked why it has taken close to nine months to start compensation payments, Mr McLoughin cited "back and forth negotiations" with the regulator and claimed the process had been held up by "appeals procedures".
However he was hopeful all redress and compensation would be "paid by Christmas".
In a written presentation to the committee, the bank said customers wrongly denied a tracker mortgage had been returned to the low-cost rate, in "all of the cases where the mortgage account is still open".
He said the correct rate had been applied to the majority of borrowers overcharged by the bank.
Mr McLoughlin was grilled extensively on the bank's expensive standard variable rate, which at 4.5pc sits at 1pc higher than AIB's SVR.
Mr McLoughlin told the committee he was unaware of the prices charged by his competitors.
He insisted the bank's fixed rates, which now account for 88pc of new lending, up from 30pc in 2015, were "among the most competitive in the market".
Under pressure to justify the prices against a backdrop of record low base rates, set by the European Central Bank, Mr McLoughlin said the cost of funds needed to be set against the higher, post-crash cost of capital.
While the bank encourages borrowers to migrate on to a fixed rates, it has also doubled its lending to developers.
Mr McLoughlin claimed a lending "fund" aimed at this sector had swelled to €1bn although the cash has not been drawn down.
He said the bank offers average loan to value rates to the sector of 60-65pc and will not exceed an LTV of 70pc.
The bank also emphasised its progress on reducing arrears, pointing out its advance was ahead of its peers and had been achieved without resorting to loan portfolio sales.