Banks pay out €647m in tracker mortgage scandal as numbers rise

KBC Bank Ireland, Bank of Ireland and AIB see number of acknowledge cases rise

Central Bank governor Philip Lane said in November that he expects some of the six mortgage lenders at the centre of the tracker scandal to be subject to enforcement actions during the course of this year.

The Republic’s mortgage lenders have paid out €647 million in refunds and compensation to customers caught up in the tracker mortgage scandal that goes back more than a decade.

The figure is contained in an update published by the Central Bank of Ireland on Monday into the debacle, which confirms, as The Irish Times reported on Saturday, that the total number of cases lenders have admitted to rose by 1,400 to 39,800 between August and December.

KBC Bank Ireland, Bank of Ireland and AIB contributed to the increase.

Some 97 per cent of affected customers already identified and verified have now received offers of redress and compensation, the Central Bank said, adding that a final report is expected to be published in the coming months as the regulator completes audits of banks' figures.


The lenders are expected to have “substantially completed” payments to the remaining 1,900 customers, including unverified cases, by the end of March, the report said.

The country's six main mortgage providers - AIB and its EBS subsidiary, Bank of Ireland, Ulster Bank, Permanent TSB and KBC Bank Ireland - have set aside €1 billion of provisions to date to cover redress and compensation, expected regulatory fines, and other costs associated with the State's biggest financial overcharging debacle.

The latest tally of acknowledged cases is almost double the 20,100 conceded before in October 2017. That’s when the Oireachtas finance committee heard distressing evidence from some affected borrowers, Minister for Finance Paschal Donohoe hauled in bank chiefs to reprimand them, and the Central Bank was subjected to a wave of public and political criticism over its handling of the matter.

"The examination has revealed the unacceptable damage that misconduct can cause to consumers up to and including the loss of their homes and properties in some cases," said Derville Rowland, director general of financial conduct with the regulator. As of last April the tracker scandal had resulted in the loss of 71 homes and 142 buy-to-let properties.

A spokesman for the Central Bank declined to give an up-to-date figure on Monday.

KBC, which had disclosed 2,754 tracker cases last summer, is understood to have seen an increase last year. AIB’s level of acknowledged cases now stands at 11,900, up 200, while Bank of Ireland’s increased by 355 to 9,700. That excludes some 5,100 tracker customers Bank of Ireland dealt with in 2010.

Consumer advocate Brendan Burgess said the 5,900 AIB customers who received a “derisory offer” of €1,615 last year for the bank’s failure to offer them a tracker when their fixed rate expired may have to take their case to the Financial Services and Pensions Ombudsman of the courts.

Affected customers who had appealed the offer through an independent process had not had their cases upheld, he said.

Central Bank governor Philip Lane said in November that he expects some of the six mortgage lenders at the centre of the scandal to be subject to enforcement actions during the course of this year.

The institution is looking at the actions of banks and individuals going back more than a decade as lenders sought to restrict access, where they thought possible, to cheap loans linked to the European Central Bank’s main rate, or put borrowers on the wrong rate entirely. It is also investigating how lenders have dealt with the debacle in recent years.

The number of conceded cases includes 7,100 accounts that were dealt with by Bank of Ireland and Permanent TSB at the beginning of the decade. These account for some €47 million of the total of €647 million paid out by financial firms to date.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times