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Bank of Ireland fined record €100m over its treatment of customers in tracker mortgage scandal

Bank’s failures resulted in the loss of 50 properties, including 25 family homes

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Bank of Ireland

Bank of Ireland

Interim chief executive of Bank of Ireland Gavin Kelly. Photo: Frank McGrath

Interim chief executive of Bank of Ireland Gavin Kelly. Photo: Frank McGrath

The Central Bank of Ireland's offices in Dublin's Docklands. Photo: Jason Alden/Bloomberg

The Central Bank of Ireland's offices in Dublin's Docklands. Photo: Jason Alden/Bloomberg

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Bank of Ireland

Bank of Ireland has been fined €100m by the Central Bank for deliberately denying thousands of its customers good-value tracker mortgages.

It is the largest fine for a lender as part of the tracker mortgage probe by the regulator, with Bank of Ireland the last lender to be sanctioned for it role in the scandal.

The bank failed almost 16,000 customers by denying them a tracker or putting them on the wrong tracker rate at a time when mortgage rates were rising.

Bank of Ireland’s failures resulted in the loss of 50 properties, including 25 family homes, something that would have been avoided if Bank of Ireland had complied with the most basic and fundamental of its consumer-protection obligations, the Central Bank said.

Bank of Ireland has admitted in full to 81 separate regulatory breaches.

We unreservedly apologise to all customers harmed by the tracker mortgage issue

The Central Bank determined the appropriate fine to be €143.6m but this was reduced by 30pc to €100.5m in accordance with the settlement discount scheme provided for in the Central Bank rules.

This is the largest fine imposed to date by the Central Bank and is in addition to a sum of more than €186.4m that Bank of Ireland has already paid to impacted customers identified prior to and as part of the Central Bank’s Tracker Mortgage Examination.

During the summer AIB and its EBS unit here were hit with a fine of almost €100m for denying people tracker mortgages.

The AIB Group wrongly denied almost 13,000 borrowers their right to then-cheap mortgages linked to the main European Central Bank rate.

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Interim chief executive of Bank of Ireland Gavin Kelly. Photo: Frank McGrath

Interim chief executive of Bank of Ireland Gavin Kelly. Photo: Frank McGrath

Interim chief executive of Bank of Ireland Gavin Kelly. Photo: Frank McGrath

Bank of Ireland was forced to compensate 15,900 tracker customers, the largest number of any of the lenders found so far to have mishandled tracker cases.

These cases include people wrongly denied a tracker and homeowners who were on the wrong tracker rate.

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Bank of Ireland interim chief executive Gavin Kelly said: “Today’s statement from the Central Bank of Ireland is extremely critical of Bank of Ireland. We understand – and fully accept – why this is.

"What took place in relation to tracker mortgages was wrong. It should never have happened. We are very sorry that it did.

“We unreservedly apologise to all customers harmed by the tracker mortgage issue. The impacts were significant and wide reaching, up to and including loss of homes in the most serious of cases.

“Banking is based on trust, but our failures damaged that trust. We have learned the hard lessons, and have taken steps to ensure we are a more customer-focused bank today. This work continues. Rebuilding the confidence of both our customers and the wider society we serve will take time, but we are committed to that journey.”

The tracker scandal goes back to 2008 and was across almost all mortgage lenders.

In some cases, banks incorrectly interpreted legal or contractual terms and conditions, denying some customers their right to a tracker.

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The Central Bank of Ireland's offices in Dublin's Docklands. Photo: Jason Alden/Bloomberg

The Central Bank of Ireland's offices in Dublin's Docklands. Photo: Jason Alden/Bloomberg

The Central Bank of Ireland's offices in Dublin's Docklands. Photo: Jason Alden/Bloomberg

Banks also failed to warn customers of the consequences of coming off their tracker mortgage to opt for a fixed rate for a period. These people were told at the end of the fixed period that they could not get back on their good-value tracker.

In June the Central Bank fined AIB Group €96.7m for its consumer-protection breaches during the tracker mortgage scandal.

A tracker mortgage is a type of home loan where the interest rate charged on the mortgage follows that of another publicly available rate, typically the interest rate set by the ECB.

The five main banks that were involved in the Irish tracker mortgage scandal are AIB, KBC, Permanent TSB, Bank of Ireland, and Ulster Bank. EBS, a subsidiary of AIB, and Springboard mortgages, a subsidiary of Permanent TSB, were also involved.

Around 40,000 customers were wrongly removed from their tracker mortgages and moved on to a higher interest rate. In many instances, people lost their homes due to the scandal.


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