Central Bank is asked to investigate overcharging
Oireachtas finance committee asks for check of all Irish banks following scandal
The clerk of the finance committee wrote to Central Bank governor Patrick Honohan requesting investigation of ‘all banks that had tracker products to establish if customers were overcharged’. Photograph: Matt Kavanagh
The Oireachtas finance committee has asked the Central Bank to investigate all Irish banks to determine if they have overcharged customers or incorrectly denied them access to a tracker rate.
This follows the recent scandal involving Permanent TSB, which admitted in July to a “serious failure” in how it managed interest rates on 1,372 mortgage accounts from 2006 onwards. In some cases, the borrowers lost their homes as a result of this failure.
On September 24th, the clerk of the finance committee wrote to Central Bank governor Patrick Honohan requesting that the regulator “investigates all banks that had tracker products to establish if customers were overcharged and not given access to the appropriate rate”.
DisquietThe Irish Times
The Central Bank has yet to respond to the letter. A spokeswoman for the regulator said: “The Central Bank is currently examining a number of lender-specific practices, particularly in relation to these lenders’ transparency with tracker borrowers. The outcome of our supervisory work, together with our ongoing monitoring of market intelligence, has and will continue to inform the decisions we make on the most appropriate and effective supervisory engagement.”
The PTSB case involved the bank failing to inform certain customers of the consequences of breaking early from a fixed rate or discounted tracker period. The consequences of breaking early were that customers lost their contractual right to be offered a tracker rate in the future. Instead they were put on standard variable rates, which proved to be more expensive.
Liam Twomey, Fine Gael TD and chairman of the finance committee, responded this week by informing the organisation the committee shared its concerns about the tracker overcharging issue and had “added a meeting with PTSB” to its work programme.
It is understood the committee will wait to hear back from the Central Bank before considering a date for PTSB to appear.
IMHO chief executive David Hall said the Central Bank should already have carried out an industry-wide investigation. “It’s not enough to simply expect individual consumers to take on these cases themselves,” he said.
PTSB has offered financial compensation to the customers affected by the overcharging. It also faces a fine from the Central Bank.