Monday 16 July 2018

Bank of Ireland admits it denied another 6,000 customers tracker rates

New Bank of Ireland boss Francesca McDonagh
New Bank of Ireland boss Francesca McDonagh
Charlie Weston

Charlie Weston

Bank of Ireland has admitted to thousands of extra cases where customers were denied a good-value tracker mortgage.

The bank said it had discovered an additional 6,000 cases where customers were due the low-rate mortgage, but had been told they were not entitled to it.

The new figure is understood to include 2,000 bank staff who Bank of Ireland was resisting including in its tracker remediation scheme, despite pressure from the Central Bank.

The 6,000 cases are in addition to 4,300 cases already admitted to by the bank.

This takes the total to more than 10,000, the largest number of the 15 lenders examining their mortgage books for overcharging.

New chief executive Francesca McDonagh has apologised for the failure to recognise that customers were due the good-value rates.

The bank has been forced to put aside between €150m and €175m to cover the cost of returning the 6,000 overcharged mortgage holders to tracker rates, refunding overpaid interest and compensating them for their loss.

"Since taking up the role of CEO at Bank of Ireland in October, making progress on the tracker issue has been a top priority. We have since made substantial progress in relation to the issue," Ms McDonagh said.

"The bank is also confirming today that c.6,000 additional customers will be part of the compensation scheme. This now gives us a clear picture of the number of impacted customers. The compensation process is commencing, and our priority is to ensure that all impacted customers are compensated as quickly as possible."

Tracker-case specialist Padraic Kissane said the admission by Bank of Ireland vindicated his stance. He previously predicted there would be a total of 30,000 tracker overcharging cases across the 15 lenders.

But the Bank of Ireland concession would mean this number goes higher, he said.

Disputed

The Central Bank said Bank of Ireland had admitted the extra tracker overcharging cases after a "robust challenge" from it.

"These are groups of customers that the Central Bank had identified as having been impacted but Bank of Ireland had previously disputed," it said in a statement.

It added that, as the Central Bank Governor Philip Lane had previously made clear, regulators would continue to challenge all lenders on disputed cases.

Prof Lane told the Oireachtas Finance Committee that in the case of two institutions, customers had been told they were not affected when the Central Bank believed they were.

The latest revelation comes after the European Central Bank (ECB) said the failure by "credit institutions to comply with their obligations towards their customers may have prudential implications and may therefore raise supervisory concerns for the ECB".

It said its concerns include those relating to financial implications for banks that may be required to pay compensation and be sanctioned by the Central Bank of Ireland for breaching contractual obligations. The ECB is worried that banks here have not set aside sufficient capital to meet the cost of the tracker redress scheme.

Trackers are the cheapest mortgages. They are usually set 1pc to 1.2 percentage points over the European Central Bank rate.

Irish Independent

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