‘Despicable’ PTSB failures caused customers to lose homes

Permanent TSB has been accused of "despicable behaviour" over its treatment of almost 1,400 mortgage customers whose accounts it mismanaged with the result that some people lost their homes.

While all 1,372 affected customers of the bank and its subsidiary Springboard Mortgages are in line for substantial refunds following the conclusion of a Central Bank investigation into the bank's mismanagement of accounts, David Hall of the Irish Mortgage Holder's Association accused PTSB of making "derisory" offers to some of the affected customers.

The enforcement investigation by the Central Bank identified “significant failures” by both PTSB and its subsidiary company, Springboard Mortgages Ltd, connected to tracker mortgage options and rates.

Among the issues identified by the investigation was PTSB’s failure to inform certain customers of the consequences of their decisions to break early from a fixed rate or discounted tracker period.

The consequences of breaking early were that they lost their contractual right to be offered a tracker rate when their fixed rate or discounted tracker period would have ended. The bank also failed to inform other customers of their right to be offered a tracker rate at the end of any fixed rate period.

In the case of Springboard’s impacted customers, the failure arose from the application of incorrect interest rates to mortgage accounts.

In all 61 accounts impacted by the multiple failures at the bank have seen a subsequent loss of ownership of the property, the Central Bank said.

The failures were also a “key factor” in the loss of ownership of at least 22 properties.

“The consequences of these failures are serious and include mortgage overpayments; mortgage arrears; legal proceedings; and in certain cases loss of ownership of properties, including some homes,” the Central Bank said in a statement.

PTSB said it would pay €50,000 to owner-occupier accounts and €25,000 to buy-to-let customers. It said if its failure was a “key factor” in ownership of the property being lost, any money still owed would be written-off.

The issue came to light in relation to four customers, who held two mortgages between them. The two couples had been on tracker mortgages and moved to fixed rates. They then broke the term of their fixed rates early in a bid to revert to a tracker mortgage in a period between 2009 and 2010.

Their contracts allowed for this at the expiry of the fixed term. However, as they broke their fixed terms early, PTSB would not allow them to revert.

They complained to the Financial Services Ombudsman, William Prasifka, who found the bank had erred by not providing the customers with sufficient information about the consequences of breaking their fixed rate early.

The bank went to the High Court, which upheld the FSO's findings in August 2012.

PTSB then appealed to the Supreme Court and the case was listed for earlier this year but the bank dropped the case before the court hearing and said it would review another 80 similar complaints the FSO had pending.

The Central Bank has now ordered the bank to put in place a comprehensive redress and compensation programme and impacted mortgage customers of both PTSB and Springboard Mortgages will receive letters over the next two weeks.

It has also required that a reduced interest rate be applied by Permanent TSB to all relevant impacted customers’ accounts as an interim measure. This is to allow these customers enough time to consider their options.

“What level of compensation would be enough to cover someone losing their home? How can you put a figure on all the stress and fear? PTSB is saying to some customers who lost their homes that it is prepared to write of residual debt. Residual debt is the least of their problems,” Mr Hall said.

“This bank fought this all the way. They took it as far as the steps of the Supreme Court and this is consistent with how they do business,” he continued.

“No heads will roll at the bank. They will be rapped across the knuckles by the Central Bank and that will be the end of it. And remember this is State-owned bank. Families have been badly damaged by what the bank is done yet where is Michael Noonan? Where is Enda Kenny or Simon Harris? No money will ever compensate these families for what they have been put through.”

Mr Hall said his organisation was offering free legal support to anyone affected by this issue at PTSB.