Monday 11 December 2017

Ulster Bank tells customers they must repay €30,000 after mortgage error

Mark Keenan

Mark Keenan

ULSTER Bank is demanding that more than 1,000 customers pay back around €30,000 each after a blunder involving under-charging on mortgage accounts.

The error involves at least 1,300 customers from whom a total amount of around €41m was not collected from their accounts over a period believed to span between three and four years.

Those who have already been notified are reported to be "distraught" while it is thought that many of the customers have not yet received notification.

It is the latest scandal involving Ulster Bank, which caused widespread disruption in the middle of last year when its IT systems went down for weeks on end, leaving many people without wages or cash.

When contacted by the Irish Independent, Ulster Bank refused to reveal how many customers were affected, over what period the error had occurred, or what amounts were involved.

A brief statement said: "Ulster Bank self-identified an under-payment error affecting some mortgage accounts.

"All impacted customers are being contacted, given time to make repayments and (can) choose from a number of repayment options."

The bank also refused to say whether it would be charging interest on the repayments it is now seeking.

The underpayment errors arose from the transfer a few years ago of First Active mortgage customers to Ulster Bank.

Affected customers had taken out mortgages, mostly during the boom years, opting for products which offered a front-loaded capital-repayments "holiday" of over three years.

During this time, they would repay interest only. After the "holiday" expired, they agreed to pay interest and capital repayments.

However, in most cases, the bank did not seek the capital repayments after the "holidays" expired.

The sums now being sought are these non-deducted payments.

Personal finance consultant John Lowe said he has "several clients" who have been sent letters demanding the return of large sums.

"They are not too happy. The letters say: 'We are sorry to tell you that we have undercharged you by X, please can you repay X.' They then list four or five payment options. However, 'can't afford to repay' isn't on the list.

"There is, however, an argument here that customers who took on a capital-payments holiday should have realised when that period was due to run out and contacted their bank when it didn't.

"So perhaps the customers aren't entirely blameless but of course it doesn't say a lot for Ulster Bank."


The Central Bank confirmed it had been made aware of the problem.

"The Central Bank was notified by Ulster Bank Ireland of an under-collection error and is working with them to ensure that all impacted consumers are treated fairly.

It said it believed the problem related to "around 1,300" account holders.

The office of the Financial Services Ombudsman said the problem had not yet been brought to his attention, and added that consumers are usually obliged to adhere to the terms of the contracts they had originally signed.

Dermott Jewell of the Consumers' Association said few bank customers keep tabs on their accounts. "They pay what they're asked to pay. That's how it works."

He said the association would be demanding the bank does not charge interest rates to customers to enable them to profit from their own error, and added that it would be seeking the facilitation of repayments "over very prolonged periods to ease the pain of the consumers involved."

Irish Independent

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