Sunday 22 July 2018

Banks refusing to refund customers after wrongly stripping them of trackers

The Central Bank of Ireland’s new Dublin headquarters. Photo: PA Wire
The Central Bank of Ireland’s new Dublin headquarters. Photo: PA Wire
Charlie Weston

Charlie Weston

Banks are refusing to compensate some customers who were denied a tracker mortgage, with other lenders making "unacceptably low" offers of compensation.

Two lenders had also failed to properly identify affected customers, the Central Bank said.

A new update from the regulatory authority lays bare the determined efforts by banks to avoid restoring people who were illegally stripped of trackers, and refund them.

It is understood the Central Bank is continually challenging lenders over how they are handling the overcharging.

In an update on the tracker scandal, the Central Bank said more than 100 families and investors had lost their houses due to banks denying them a low-cost tracker.

Another 3,000 cases had been admitted to by banks where mortgage holders should have had a tracker, or were given the wrong interest rate on their tracker, the Central Bank said.

Lenders are supposed to restore affected customers back to their cheap tracker rates, refund the overpayments and pay compensation.

The regulator said it had forced two unnamed lenders to go back and reconsider how they are carrying out their overcharging probe.

"The Central Bank is concerned that two lenders may have failed to identify populations of impacted customers or failed to recognise that certain customers have been impacted by their failures," it said in a statement.

Just a quarter of customers have gotten the money they are owed due to issues around their tracker, as well as being compensated for it.

This is because just three lenders have started their redress programmes.

Also, only three lenders have established their appeals process.

Ed Sibley, deputy governor of the Central Bank, said in an address to bankers that they needed to change their approach.

"Governance issues remain prominent and there is strong evidence - none starker than in some banks and their approach to the tracker issue - that cultural change is still necessary."

Two years ago, the Central Bank told 15 lenders to probe their mortgage books to identify customers wrongly denied a good-value tracker during the financial collapse.

Now an extra 3,000 cases of tracker loss have been identified since March.

This took the total to 13,000, the Central Bank said.

Another 7,100 cases have already been settled, including 1,300 Permanent TSB cases, from a total of more than 20,000 cases.

The Central Bank said the numbers would rise further, with some estimates putting the eventual total at 30,000.

Most homeowners were wrongly denied a tracker rate after opting for a fixed rate for a period. Another 40pc kept their tracker but were put on the wrong margin.

The Central Bank said 23 residential mortgage holders lost their homes due to the "failings" of lenders. Another 79 buy-to-let properties were lost due to tracker denial cases.

In a briefing note, the Central Bank warned: "As lenders' analyses continue, this number will rise."

Irish Independent

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