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Tuesday 20 August 2019

AIB the latest lender set to face sanctions over tracker mortgage scandal

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Charlie Weston

Charlie Weston

AIB is now set to face sanctions from the Central Bank for overcharging thousands of customers on tracker mortgages.

It takes to five the number of lenders facing enforcement proceedings from the Central Bank.

They include Permanent TSB, Ulster Bank, KBC Bank and Bank of Ireland.

The regulator has already fined Springboard, a former subprime division of Permanent TSB. Governor Philip Lane said at the weekend that the extent of the tracker scandal is set to widen.

Around 20,000 cases have been admitted to by banks across the 15 of them told to examine their mortgage books.

But independent experts expect the total number to rise to in excess of 30,000.

The move on AIB has come somewhat as a surprise as the 71pc-taxpayer owed bank had presented itself as one of the more co-operative banks on the tracker overcharging issue.

The bank has already admitted to 4,600 tracker overcharging cases, setting aside €190m to cover the cost of putting customers back on low tracker rates, refunding them overcharged interest and paying compensation.

Deputy governor of the Central Bank Ed Sibley said on the tracker scandal: “I expect all the main banks will be subject to Central Bank enforcement investigations.”

Banks that are subject to enforcement actions face fines of up to €10m.

And Mr Sibley called on bankers responsible for tracker scandal to be held to account.

He said the tracker mortgage scandal is the latest in an “unacceptably long list of cultural failings in financial services firms”.

Speaking at an Eversheds Sutherland conference on leadership and culture in financial services, he said the restoration of trust in financial services is “vital” for the system to be effective in serving the economy and its customers sustainably over the long term.

“Cultural change is as urgent as technology, business model and regulatory changes,” he said.

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