€163m paid to customers in refunds and compensation a ‘fraction’ of money owed

Central Bank governor Philip Lane has said he remains concerned about tracker-mortgage overcharging that some banks continue to ignore, even as he expects the "vast majority" of 13,000 confirmed cases to receive refunds and compensation before Christmas.

Speaking to reporters after meeting Minister for Finance Paschal Donohoe yesterday, Prof Lane said the €163 million lenders have paid out to affected customers is only a "fraction" of the total remediation cost.

“We think the vast majority of [the 13,000] cases will be paid out before Christmas,” Prof Lane said.

“However, we continue to press the banks to expand their coverage to make sure that all those affected are included in their schemes.”

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The regulator’s current focus “is to make sure yet more are included so that all those affected will receive redress and compensation from the banks”.

Almost two years after the Central Bank ordered the country’s lenders to review their books for cases where borrowers had been wrongly denied low-cost mortgages linked to the European Central Bank’s main rate, the regulator said last week that it remains concerned that two lenders have failed to identify or recognise a number of customers affected by their failures.

It also emerged last week that the Central Bank had begun enforcement investigations into Bank of Ireland and KBC Bank Ireland for their handling of tracker customers.

The regulator has also taken similar actions in the past two years against Permanent TSB and Ulster Bank.

Other banks

AIB, which has found 3,200 cases of customers wrongly denied cheap mortgages linked to the European Central Bank's main rate, and Permanent TSB, which identified almost 2,000 impacted borrowers since mid-2015, have almost completed their planned payouts.

Ulster Bank, a unit of Royal Bank of Scotland, started its redress programme in August. The company saw its number of customers impacted by the tracker controversy swell from 2,000 in December to 3,500 in June.

However, the two other main mortgage lenders, Bank of Ireland and KBC Bank Ireland, have yet to commence remediation.

The other six lenders involved in an industry-wide review initiated by the Central Bank into tracker-mortgage overcharging have uncovered much fewer problems than the five largest banks, according to sources.

Donohoe’s findings

Mr Donohoe’s meeting with the Central Bank governor came before the Minister spoke to the chief executives of KBC Bank Ireland, Bank of Ireland and Permanent TSB yesterday. He is due to meet Ulster Bank executives today and a team from AIB tomorrow before issuing a statement on his findings.

Bank of Scotland, which introduced tracker mortgages to the Irish market in 2001, said last week it was “working closely” with the Central Bank and would be contacting affected customers “as soon as possible”. The bank’s parent, Lloyds Banking Group, handed back its Irish licence in 2010 and most of its loan book has since been sold on.

Danske Bank, the last of the top seven Irish mortgage lenders before the crisis, has said that its tracker-mortgage “review is ongoing”.