AIB overcharged ‘several hundred’ customers by as much as €500
Bank identifies additional tracker loan overcharging problem as review continues
AIB is the latest lender to find further problems as the industry continues to carry out examinations, as directed by the Central Bank in late 2015, of cases where customers were wrongly refused a tracker rate. Photograph: Reuters
AIB has overcharged “several hundred” customers by as much as €500 in applying the wrong interest rates on so-called “tracker mortgages”, chief executive Bernard Byrne told the Oireachtas finance committee on Tuesday.
The fresh cases are in addition to 3,200 customers, who were wrongly denied their contractual rights to a cheap tracker rate linked to the European Central Bank benchmark, as of the end of July.
The Central Bank ordered the State’s mortgage lenders to carry out an examination in late 2015 of cases where customers had been wrongfully denied their contractual rights to an ECB tracker rate. The regulator estimates that up to 15,000 mortgage holders may have been affected across the industry.
AIB on Tuesday became the latest bank to reveal it has also detected overcharging of customers who remained on tracker rates and were outside the focus of the Central Bank-driven examination. The new cases include instances where customers were overcharged for as short a period as a weekend and where ECB rate reductions weren’t passed at the right time.
Elsewhere, Bank of Ireland is dealing with 3,654 tracker-rate customers that had been overcharged by an average of 0.15 per cent, the bank said last week. That is in addition to 602 Bank of Ireland customers found to have been wrongly denied an ECB tracker rate.
Ulster Bank disclosed in August that it had taken a €39 million charge in its accounts in the first half of this year as it uncovered fresh “errors” in its personal and commercial loan books when working 3,500 cases over overcharged tracker customers.
Meanwhile, AIB executive Jim O’Keefe, head of the unit that deals with troubled loans, told the committee the bank aims “imminently” to launch a mortgage-to-rent plan with a third party – known to be debt advocate David Hall’s Icare Housing – to keep borrowers in their homes.
However, Mr O’Keefe said that the plan isn’t a “silver bullet” for the State’s long-term arrears issue.
Separately, Mr Byrne suggested that the group’s EBS brand may unveil a mortgage rate cut soon, following AIB’s recently-announced quarter percentage point cut in its standard variable rate for new and existing customers, its fifth such reduction in three years.
The chief executive also said he didn’t see signs of a house price bubble in Ireland, even if there is a “scarcity value” on homes as supply continues to fall well short of demand. Rising house prices aren’t being driven by a surge in credit and Mr Byrne said customer affordability “is very strong” and values in places are only increasing to meet development costs.
The committee also heard that AIB is reviewing its policies after a staff member travelling between two branches in Galway mislaid confidential information relating to 550 customers last month. AIB’s head of retail and commercial banking in Ireland, Robert Mulhall, said it was “unusual” that a staff member was carrying printed information, rather than in electronic form.
“We’re taking the lessons and revising the policies accordingly,” Mr Mulhall said.