Tuesday 18 December 2018

'It's now time that all banks seek to regain trust of the Irish people by actions, not words'

Banks promise faster redress for homeowners illegally stripped of tracker mortgages

The commitments come after they were hauled into meetings with Finance Minister Paschal Donohoe (Stock picture)
The commitments come after they were hauled into meetings with Finance Minister Paschal Donohoe (Stock picture)

Charlie Weston Personal Finance Editor

Banks have lined up to promise faster redress for homeowners and investors who were stripped of their tracker mortgage illegally.

The commitments come after they were hauled into meetings with Finance Minister Paschal Donohoe this week to explain their “disgraceful” behaviour on the tracker issue.

"Today all five banks have made statements unreservedly apologising to their customers who have been adversely and shamefully impacted by the tracker rate scandal," a statement from Minister Donohoe's read on Wednesday evening.

"Let me be very clear - the Government believes that the behaviour of the banking sector in relation to tracker mortgages was disgraceful.  This is a scandal. It should never have happened and the Government is determined to ensure that it should be resolved."

"There has been a varying response from the banks and as a result, banks that did actually respond in a more appropriate and customer centric manner will not receive any credit for doing so," he said.

"It is now time that all banks seek to regain the trust of the Irish people by actions, not words."

Ulster Bank has again apologised unreservedly and said it will now pay refunds and compensation to 1,000 affected mortgage holders by the end of the year.

Most of the 3,500 account holders the bank says lost trackers have been restored to the correct rate, but the bank had only paid refunds to 50 people up to now.

Ulster Bank has promised Finance Minister another 1,500 Ulster Bank by the end of next March.

The rest will be refunded and compensated by June, bank boss Gerry Mallon told Mr Donohoe.

Ulster Bank added: “Where we identify a customer who has lost their home as a result of the loss of a tracker rate, we communicate with them, arrange a meeting and offer an upfront initial payment of €50,000.”

Mr Mallon said: “I would like to apologise unreservedly for the failures which led to customers losing their tracker rates, as well as for the length of time which it is taking for us to put this right.

“While we have returned existing customers to the correct tracker rate and started to pay redress and compensation, I acknowledge that this process is taking far too long to complete and this is not acceptable.

“I apologise to all customers, even those not impacted by the examination for this. We have listened, we are learning and we are focused on completing this process, putting this right and rebuilding our customers’ trust in Ulster Bank.”

Permanent TSB said it expects to have all impacted customers on the correct rate within the next week, and to have paid redress and compensation by the end of the year.

The bank has identified and paid refunds to 1,935 customers in 2015, including 242 accounts at its former subprime subsidiary Springboard.

Another 36 account holders will be put back on the correct tracker rate by the end of this month.

There are another 363 customers due refunds and compensation and they are to be paid by December 31, the bank said.

Chief executive Jeremy Masding said: “Permanent TSB fully accepts the very strong concern and disapproval which the Minister expressed about the management of this issue across the banking sector.”

KBC said that it sincerely apologises for the past errors the bank has made and the distress this has caused its impacted customers.

That bank said that 571 tracker mortgage customers were already rectified in 2010, and that a further 490 customers have been identified as impacted to date.

KBC said that it anticipates that up to an additional 200 to 600 cases may be impacted, and that it expects to have concluded the identification of the vast majority of customers impacted by year end. 

AIB also issued a statement apologising to customers "and reiterates this should never have happened".

The bank said it has redressed and compensated the majority of impacted customers who were identified as no longer on a tracker and were incorrectly on a higher tracker margin for a period of time.

In a statement on Wednesday afternoon, The Central Bank said that its priority remains to ensure that lenders identify all customers affected.

Governor of the Central Bank, Philip R. Lane said: "While we note the commitment of the banks to meet the requirements of the Central Bank and Government, given some lenders’ past behaviour, the Central Bank is under no illusion that this will require continued and concerted pressure to ensure all affected customers receive redress and compensation.

"It is now incumbent on the heads of the banks to ensure that all affected customers are identified, and to ensure that redress and compensation are delivered swiftly to those to whom so much distress has been caused."

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