Ulster Bank to pay some overcharged customers over €100,000

RBS-owned bank has identified 3,500 customers caught up in ECB tracker rate scandal

Ulster Bank said it will have to pay more than €100,000 in redress and compensation to some of its 3,500 customers caught up in an industry-wide tracker mortgage overcharging scandal, though it could be "well into 2018" before all cases are addressed.

It is understood that this level of remediation largely, if not exclusively, relates to customers who lost their homes in the past decade as a result of being wrongly denied a European Central Bank tracker mortgage, typically after a period of being on a fixed rate.

Speaking to the Oireachtas finance committee on Thursday, Ulster Bank's chief executive, Gerry Mallon, said the number of customers who lost their homes as a direct result of overcharging is likely to be below the 14-15 cases indicated last December.

That is in spite of the fact that the number of its customers impacted by the issue has risen from 2,000 to 3,500 over the period.


Mr Mallon said that fewer than 40 customers have been remediated to date, while the Oireachtas committee’s chairman, John McGuinness TD, criticised the bank for the lack of information it has been offering overcharged borrowers.

Correspondence from the public to the committee “is telling us that your helpline is a farce, that it doesn’t give answers or any comfort on any timeframe in dealing with the issue, or whether they are in scope or not,” Mr McManus said. “The level of information is such that it’s unhelpful and it adds to the anger of the people who get in touch with the helpline in the first place.”

The bank’s chief financial officer, Paul Stanley, told the committee that the bank plans to pay an initial €50,000 to customers who lost their homes as a result of overcharging, before calculating final payments due.

Contractual right

Ulster Bank also revealed that up to 1,000 of the affected borrowers have since moved banks or redeemed their loans. Of those that have switched lenders, it plans to make up the difference between the former customers’ current mortgage costs and what they would have paid had they been given their contractual right to a tracker rate with Ulster Bank, Mr Stanley said.

Ulster Bank set aside €206 million last year to cover costs associated with the mortgage redress scheme for customers who were wrongly denied a tracker interest rate on their home loans over the past decade.

The bank, a unit of Royal Bank of Scotland (RBS), took an additional €39 million charge in the first half of this year as it uncovered fresh "errors" in its personal and consumer loan books when working through its tracker-mortgages cases.

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.

Of the country's five largest mortgage lenders, only Bank of Ireland and Belgian-owned KBC Bank Ireland have yet to start remediating overcharged customers. KBC, alone among the five, has not been in a position to indicate how many of its borrowers have been caught up in the controversy, going back over a decade.

Meanwhile, Mr Mallon, who became Ulster Bank’s chief executive in July 2016, said that as the lender works with customers on various Brexit scenarios, some businesses “are looking at expansion opportunities in the UK as a result of Brexit and we are seeking to help finance and support such expansion.”

The banks also has "regular engagement" with IDA Ireland and its colleagues in RBS to help identify businesses in the UK that are considering setting up operations in the Republic, with a view to providing banking products and services to them, he said.

Turning to the State’s housing crisis, Mr Mallon said that Ulster Bank has committed to financing residential development schemes in the past two years that will deliver more than 1,200 homes as well as financing student accommodation to deliver more than 1,000 new student living units.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times