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KBC Bank Ireland overcharged some homeowners who switched their mortgages

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KBC Bank is selling its mortgages to Bank of Ireland. Photo: Gareth Chaney/Collins

KBC Bank is selling its mortgages to Bank of Ireland. Photo: Gareth Chaney/Collins

KBC Bank is selling its mortgages to Bank of Ireland. Photo: Gareth Chaney/Collins

Departing bank KBC has admitted it overcharged some mortgage customers who switched to another lender on break fees. It has now paid the affected customers compensation.

The miscalculation of break fees may have discouraged hundreds of people from switching from the bank, which is selling its mortgages to Bank of Ireland.

It is understood a number of KBC mortgage-holders have been anxious to choose their own lender ahead of their home loans being sold to Bank of Ireland.

KBC Bank Ireland admitted it miscalculated the break fee for some of its customers who wanted to come out of a fixed rate and switch to another lender.

Consumer campaigner Brendan Burgess said: “A lot of people who wanted to switch from KBC were given the wrong break fee and then decided not to switch, so they have lost out a lot as rates have gone up since.”

KBC Bank said 166 mortgage accounts where people broke out of a fixed rate and switched were affected by the error.

However, Mr Burgess said: “The big issue is how many people were given wrong quotes and as a result chose not to switch when the rates were much lower.”

KBC said in a statement: “Following an internal review, KBC Bank Ireland identified that some calculations of break funding fees on one specific KBC system were incorrect.”

It said the calculations, which are automatically generated, led to an overpayment or in some cases an underpayment in what it calls break funding fees.

It added that 166 mortgage accounts were affected, with 106 of them overcharged and 60 undercharged.

“Where an underpayment occurred, KBC Bank Ireland are not seeking this to be repaid by the customer and no further action is needed,” the bank said.

It said it has contacted and apologised to all affected customers regarding the error and refunds are being applied where required. The total repaid in refunds is €28,210.

“Processes have been put in place to ensure this error does not occur again. KBC reported the error to the Central Bank in July 2022,” the bank said.

Earlier this year, Mr Burgess advised KBC mortgage-holders to consider switching to another lender before their mortgages are acquired by Bank of Ireland.

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The advice from Mr Burgess comes after the competition watchdog cleared the €8.8bn sale of KBC Bank mortgages to Bank of Ireland in May. The transfer is not due to be finalised until the first quarter of next year.

Mr Burgess said Bank of Ireland’s “very high rates for existing customers” and its practice of charging them more than new customers will result in a huge increase in mortgage repayments for KBC customers when the mortgages.

Bank of Ireland is taking over KBC performing loans, including mortgages, as well as its deposits and a small number of non-performing loans.

Among the conditions imposed by the competition watchdog are that KBC mortgage customers will be entitled to the same fixed rate they received at KBC for the remainder of the fixed term of their mortgage.

Customers benefitting from a 0.2pc discount for holding a current account with KBC will be able to carry that over to Bank of Ireland without the need to have a Bank of Ireland current account.

Bank of Ireland has also pledged to offer KBC customers equivalent variable-rate and fixed-rate options on their first roll-over after migration.

Mr Burgess said his submission to the Competition and Consumer Protection Commission “was ignored completely”.

The submission had called for a condition attached to the takeover requiring Bank of Ireland to treat the KBC mortgages as a separate entity.


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