Number of tracker mortgage overcharging cases tops 21,100

State’s top five mortgage lenders issue updates after political pressure

 

The Central Bank said it remains in dispute with some banks about the extent of tracker mortgage overcharging as the State’s five largest home lenders revealed that the number of impacted borrowers may now be as high as 21,134.

The regulator on Wednesday signalled that it will notify lenders of the groups of mortgage borrowers it believes should also be included for refunds 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,” said Central Bank governor Philip Lane.

The State’s five largest home loan lenders on Wednesday succumbed to political pressure and unveiled plans to address the tracker mortgage scandal.

KBC Bank Ireland disclosed on Wednesday that as many as 1,661 of its mortgage customers may have been hit by overcharging.

The Belgian-owned bank had declined last month to give any details on the number of affected customers when questioned by members of the Oireachtas finance committee.

It said on Wednesday that it had “rectified” 571 customers in 2010, while a further 490 had been identified under an industry-wide examination which began in 2015. KBC anticipates that up to an additional 200-600 borrowers may be impacted.

“KBC expects to have concluded the identification of the vast majority of customers impacted by the tracker examination by the year end,” it said.

“Payment and redress for customers identified so far will commence in early November. For straightforward cases, which we expect to be the majority, we expect to complete payment by the year end.”

Inside Business on the tracker scandal

Overcharged

The industry has found itself at the centre of a political and public storm in recent weeks as it emerged how slow it has been in getting a handle on the situation.

It comes almost two years after the Central Bank ordered 15 current and former lenders to go through their books to find, refund and compensate customers who were wrongly denied tracker mortgages or put on the wrong rates.

Bank of Ireland confirmed that it has identified about 600 customers who were wrongly denied a tracker mortgage and a further 3,700 who were overcharged by an average of 0.15 on a tracker rate of interest.

The bank said that all of these customers have been returned to the correct rate and that compensation will start for the 4,300 borrowers from November 10th. It aims to have compensated “all customers, subject to their agreement, by the end of the year”.

Bank of Ireland has known of problems in its tracker portfolio since at least 2010, when it was forced to put 5,100 customers on the wrong rate on the correct one.

The bank disclosed that it is carrying out a review to see if “other customers should be included in the compensation process” and that it will issue a further update in the middle of November.

Disputed cases are understood to include 1,800 former and current Bank of Ireland staff, whose mortgage deals were worded ambiguously. While the bank is said to have generally conceded in favour of outside borrowers in such instances even if its legal advice is that it would win a court case, it has argued that staff members were financially literate enough to know what they were signing up to, according to sources.

Priority

“Since taking up my position as group chief executive earlier this month, the tracker issue has been a personal priority,” said chief executive Francesca McDonagh, who succeeded Richie Boucher as head of the bank a little over three weeks’ ago. “All impacted customers must be identified as quickly as possible and treated fairly,” she said.

AIB said on Wednesday that as of the end of September it had identified 3,416 customers who had been wrongly denied a tracker mortgage. It said that 91 per cent of these have received redress and compensation to date. The bank said it aims to complete remediation on these customers by the end of the year.

However, the bank also said it estimates that a further 170 cases will be found by the end of the year, and that payments to these will not be finalised until the end of March.

Rate

AIB also disclosed that as many as a further 1,016 customers were charged a higher rate than agreed on their tracker mortgages. Just over half of the 736 confirmed cases have been redressed and compensated to date. This will rise to 100 per cent by the end of December, AIB said.

Permanent TSB said that it has returned 98 per cent of the 1,971 customers found to have been denied a tracker mortgage back on the right rate and offered redress and compensation to 82 per cent of them.

It plans to have all of the customers on the correct rate by the end of October and made remediation offers to the remaining 363 borrowers by the end of December.

Ulster Bank, part of Royal Bank of Scotland, said it has returned all of its 3,500 impacted customers to the right rate and made redress and compensation payments to 100 of these.

It said that 1,000 customers will have received payments by the end of the year. This figure will rise to 2,500 by the end of next March with the remainder completed by the end of June 2018, it said.

Ulster Bank borrowers found to have lost their homes as a result of the overcharging will receive an initial €50,000 payment.