Ombudsman swamped by homeowners deep in debt
Protection products behind record levels
THE surge in the number of homeowners who are in arrears has prompted a rash of complaints to the State's financial services ombudsman.
A new report due to be published today has also found that a move by regulators to force banks and credit card companies to probe claims of mass mis-selling of payment protection insurance policies has also generated a flurry of referrals to the ombudsman.
Disputes about mortgages and payment protection policies helped push up the overall numbers of complaints to an all-time high of 8,135 last year.
Ombudsman Bill Prasifka, whose office operates a free dispute resolution process for consumers, said a total of €1.73m was paid out in compensation last year.
Mortgage issues were responsible for almost two-fifths of banking complaints in 2012.
There are almost 136,000 residential mortgage accounts in some form of arrears.
The complaints were to do with the repayment terms being imposed by the banks on those in arrears, and disputes about how banks were treating those in arrears.
Mr Prasifka warned troubled mortgage holders that they must first hold to the terms of the Mortgage Arrears Resolution Process (MARP) before they can take up an issue with his office.
The MARP process sets out the rules of engagements for banks and consumers when a mortgage holder is in arrears.
Only if the MARP process has been unsuccessful can Mr Prasifka's office get involved.
Homeowners being taken off low-priced trackers continue to generate vast numbers of complaints. This happens when a mortgage holder opts for a fixed rate and instead of being returned on to the tracker they are put on to a more expensive variable rate.
The bank then claims it no longer offers trackers.
Mr Prasifka said if the documents sent to the mortgage holder did not make it clear that there was no option to go back to a tracker then he generally finds in favour of the homeowner.
There was a 216pc rise in the number of complaints last year about mis-selling of payment protection insurance.
Payment-protection insurance (PPI) is a type of insurance that repays your loan, mortgage or credit card in the event that you lose your job, have an accident or die.
It is separate to mortgage-protection insurance, which lenders insist homeowners take out. Some 340,000 people bought the insurance products between 2007 and 2011.
As many as one-fifth of those who took out these products in the past five years are likely to have been victims of the massive insurance scandal, experts said.
The Central Bank has told AIB, Bank of Ireland, Ulster Bank, Permanent TSB, EBS and American-owned GE Money to review their sales of the product since 2007. One other unnamed firm has also been told to probe its sales of the product.
It is understood the surge in PPI is related to claims handling firms submitting complaints on behalf of consumers, despite the Central Bank telling people they have no need to use these firms.
The ombudsman said the overall level of complaints was at its highest since the office was founded in 2005.
This was despite the fact that more complaints were being settled before his office had to make a decision on a complaint.
"This office remains at the centre of dealing with legacy issues arising out of the financial crisis. For many citizens, their lives cannot move forward until these matters are dealt with fairly, effectively and expeditiously," Mr Prasifka said.