Lender pays compensation after error with trackers

Charlie Weston, Personal Finance Editor

MORTGAGE lender Permanent TSB has been forced to put 53 customers back on trackers and compensate them, the Irish Independent has learned.

It comes a week after AIB admitted it had to restore trackers to 214 customers, after failing to offer them trackers when they came off a fixed rate.

In May, Bank of Ireland had to restore more than 2,000 people to trackers after it admitted it failed to observe Central Bank rules about the need to warn customers of the cost implications of giving up a tracker.

Permanent TSB, AIB and Bank of Ireland customers signed up for variable rates after completing a fixed-rate period.

But they would have been more likely to opt for a tracker had they known of the cost difference between a tracker and a variable.

Trackers are regarded as great value because they are set at very low levels and can only rise when the ECB rate rises.

In contrast, most banks have raised variable rates a number of times. The Permanent TSB variable is now close to 6pc after a series of rises.

'Error'

Now Permanent TSB has restored 53 people to trackers and compensated them an average of €5,300 each after what it called "an administrative error" meant it failed to offer them a tracker when they came off fixed rates.

The error occurred between 2004 and 2006.

The lender said it had informed the Central Bank about the blunder.

AIB has reimbursed almost €1m after mortgages were incorrectly put on standard variable rates when fixed-rate deals ended.

Customers got an average of €4,500 in compensation.

Bank of Ireland paid out compensation of up to €2,000 per customer to 2,096 customers after those who switched from a tracker to a fixed rate were not offered a tracker again when the fixed period was up.

Karl Deeter, of Irish Mortgage Brokers, said there was an onus on banks to treat customers properly initially rather than having to come back and correct their errors at a later stage.

Meanwhile, AIB has admitted its online banking system cannot facilitate people who want to make overpayments on their mortgages.

People who want to overpay on their home loan have to go into a branch and pay cash.