Tracker mortgage scandal: Where are we right now?

Some 40,100 bank customers were caught up in the debacle

Customers have been compensated but most of the banks have yet to be fined by the Central Bank. Photograph: Nick Bradshaw/The Irish Times

Customers have been compensated but most of the banks have yet to be fined by the Central Bank. Photograph: Nick Bradshaw/The Irish Times

 

The investigation into the Republic’s tracker mortgage scandal, which dates back more than a decade, started in earnest in 2015. Earlier this year, the Central Bank’s final report on the matter laid out the extent of the issue.

Some 40,100 customers were paid €683 million in redress and compensation while 99 families lost their homes as a consequence of being denied or moved from a tracker rate.

And while customers have been compensated, most of the banks have yet to be fined by the Central Bank. The country’s six main mortgage lenders – AIB and its EBS subsidiary, Bank of Ireland, Ulster Bank, Permanent TSB and KBC Bank Ireland – have, however, set aside more than €1.1 billion of provisions to cover redress, compensation, regulatory fines and other costs linked to the State’s biggest financial overcharging fiasco.

Permanent TSB is the only bank that has yet been fined and its payment to the Central bank for its failings came to €21 million. KBC, meanwhile, is the final bank to detail the extent of provisions it is making for a fine.

The tracker scandal raised its head when many of the affected customers moved from tracker mortgages to fix-rate loans for a period between 2006 and 2008 to avoid uncertainty over monthly payments as the ECB was increasing its rates. They were refused their right to return to a tracker loan as banks stopped offering these products during the financial crisis.

Refunds

For those 99 families that lost their private dwelling home, an average of €194,000 of refunds and compensation was paid. Buy-to-let borrowers who lost their properties received an average of €162,000.

The total of 40,100 tracker cases includes 5,100 Bank of Ireland and about 2,000 Permanent TSB accounts that were dealt with before the Central Bank ordered the examination.

All of the banks implicated in the scandal have confirmed they wouldn’t contest complaints made to the Financial Services Ombudsman outside a six-year time limit.

And while the Central Bank has issued its final report on the matter, that’s not likely to be the end of it from the regulator’s point of view. It’s understood that with enforcement cases pending it may well see fit to update the public again. Additionally, it seems rather likely that whenever they appear before an Oireachtas committee again, the politicians will be keen to hear from the bank what stage the enforcement is at.