BoI sets aside more compensation as tracker scandal numbers rise

Disparity partly explained by fact 3,700 tracker BoI customers only overcharged small amount

Bank of Ireland headquarters, Dublin: BoI has increased its provisioning for the overcharging scandal to €200m, up from the €26m originally earmarked.  Photograph: Frantzesco Kangaris/Bloomberg

Bank of Ireland headquarters, Dublin: BoI has increased its provisioning for the overcharging scandal to €200m, up from the €26m originally earmarked. Photograph: Frantzesco Kangaris/Bloomberg

 

Despite having twice the number of impacted customers, Bank of Ireland has set aside roughly the same amount of money as rival AIB to compensate customers affected by the tracker mortgage scandal.

In a statement on Thursday revealing that an additional 6,000 customers were now in line for compensation, Bank of Ireland said it had increased its provisioning for the overcharging scandal to €200 million, up from the €26 million originally earmarked. The latest provision charge equates to about 15 per cent of its pretax profits for last year.

While the increased provisioning reflects the jump in customers, wrongly moved off tracker mortgages or overcharged on their existing accounts, it is only €10 million more than the €190 million set aside by AIB to cover just over 4,100 cases.

The disparity between the two numbers may be partly explained by the fact that some 3,700 tracker customers with Bank of Ireland were apparently only overcharged a small amount.

Significant cohort

A Bank of Ireland spokesman said a significant cohort of affected customers were overcharged by a rate differential of up to 0.15 per cent.

In its earlier statement, the bank confirmed that 10,300 customers were now due to be compensated as a result of the overcharging scandal, up from the 4,300 previously admitted by the bank.

The new figure makes the number of impacted customers at Bank of Ireland more than double that of its nearest rival AIB, which stands at 4,100 customers. Ulster Bank has 3,500 impacted customers while Permanent TSB and Belgian KBC have 1,971 and 1,661 respectively.

Despite being detected nearly two years ago, the full extent of the overcharging scandal is only now coming to light.

The total number of impacted customers is expected to rise to nearly 30,000 once the Central Bank’s review is complete.

Potential sanctions

Minister for Finance Paschal Donohoe has said he will decide by mid-December whether banks have made sufficient progress to avoid potential sanctions including an increase in its annual bank levy.

Sinn Féin finance spokesman Pearse Doherty said: “The fact that only in September they [banks] were supposed to have published final figures shows the ongoing contempt the banks have for the Central Bank’s process and for the victims.”

Mr Doherty said public and political pressure must now be focused on Ulster Bank whose timetable is pitifully slow and on Permanent TSB who have returned customer to a rate well above what their contract entitles them to.