Ulster Bank to refund 9,800 mortgage holders who were overcharged

Ulster Bank is to refund 9,800 mortgage account holders in the Republic who were overcharged on the interest rate on home loans drawn down between 2001 and 2008.

Customers are set to receive refunds of €2,300 on average, plus compensation ranging from €100 upwards. Most will receive compensation of €500, the bank has confirmed, and the payments will be made to impacted customers by the end of 2019.

Ulster Bank said it would not seek repayments from some 8,500 accounts that were also positively impacted – they were undercharged on their interest rate – by the bank’s error over the period.

The bank, a subsidiary of Royal Bank of Scotland, has not put a total cost on dealing with this issue, but the bill for the refunds alone would run to €22.5 million. Ulster Bank will also pay several million in compensation and meet various legal and administrative costs.

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Apologised

In letters sent out to affected customers, Ulster Bank has apologised for the overcharging. It explained that when borrowers received their loan offer, the document quoted a specific interest rate.

Before the mortgage commenced, the interest rate was increased by Ulster Bank without the customer being informed. This resulted in the borrower paying a higher rate of interest over a period of years. Some 90 per cent of the loans were for fixed terms and the rates being charged ranged from 2 to 7 per cent at the time.

Ulster Bank's deputy chief executive, Paul Stanley, said the error emerged when it undertook a trawl of its home loans book as part of the industry-wide tracker mortgage examination ordered by the Central Bank of Ireland.

“It is important that, when we find issues like this, we do the right thing, fix the error, explain what has happened and put it right for our customers. The issue negatively affected 9,800 mortgages, and positively affected 8,500 mortgages.

‘Keep the benefit’

“For those customers who have benefited we will not be changing anything, and they will keep the benefit. For those customers who have been negatively affected, we are currently in the process of writing to them to apologise, explain what it means for them, and provide them with refunds and compensation.

“We sincerely apologise for the impact this has had on our customers. Customers do not need to take any action. We will write to them if they have been negatively affected.”

Ulster Bank in the Republic booked an additional €78 million of provisions to deal with “conduct and litigation” costs in its 2018 financial accounts, and has set aside about €500 million of such provisions since 2015. Some €300 million of this relates to its exposure to the tracker mortgage scandal, which impacted about 5,500 customer accounts.