Tracker mortgage scandal: Overcharging cases reach 33,700 after showdown

The number of borrowers caught up in an industry-wide tracker mortgage scandal has surged by two-thirds to 33,700 in the space of 12 weeks, driven by Bank of Ireland, KBC Bank Ireland and AIB as banks bowed to political and regulatory pressure to acknowledge swathes of disputed cases.

Belgian-owned KBC Bank Ireland said on Wednesday that its level of identified affected customers has increased by 1,884 cases since late October to 3,545, while AIB’s number has risen by 4,970 to 9,402 - amounting to an overall increase by the two lenders of 6,854.

Bank of Ireland had previously disclosed last month that a further 6,000 of its mortgage borrowers had been overcharged, bringing its total to 14,500, including 5,000 mortgage holders addressed in 2010.

Ulster Bank has stuck to the figure of 3,500 customers outlined during the summer, but it has signalled that this could rise as it works with the Central Bank "to identify any additional customers who may be impacted".

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The last of the five main mortgage banks, Permanent TSB, saw its number of affected customers rise by 9 cases to 1,980.

The Central Bank said on Wednesday that the banks “are on course” to meet their commitments in late October to pay refunds and compensation to impacted customers. However, it will be well into next year before all affected borrowers - mainly the newly identified cases - receive payments.

“While the Central Bank’s view is that the vast majority of customers have been identified, we will continue to review, challenge and verify the work undertaken by the lenders and complete our intrusive on-site inspection programme,” the bank said in its latest progress report on the scandal.

Compensation and refunds

The regulator said in September that banks had identified 13,000 customers who were either wrongly denied their right to a low-cost mortgage linked to the main European Central Bank rate, or were put on the wrong rate. That’s in addition to 7,100 cases resolved in 2010, before the Central Bank ordered an industry-wide examination two years ago.

However, banks have publicly acknowledged further cases since then, following pressure from politicians and regulators as public and political uproar over the scandal grew. Bank of Ireland reported a further 6,000 cases in November.

As of the middle of December, 9,200 of the 13,000 customers identified as of the end of September had received €170 million in refunds and compensation.

“The majority of the remaining customers can expect to receive redress and compensation by the year-end,” the Central Bank said.

Former lenders

Of the additional 13,600 cases acknowledged since September, only 3,700 have received payments - totalling €80 million. The regulator said it “will be vigilant” in ensuring that money transfers to these customers are progressed at pace.

Six former mortgage lenders included in the review - including Danske Bank, Bank of Scotland (Ireland) and ACC Loan Management - have identified about 300 affected customers to date. Four of these companies expect to complete redress and compensation payments by the end of the year, with the fifth expected to finish next month.

The final company, Irish Bank Resolution Corporation, which The Irish Times reported on October had fewer than 20 cases, is currently in liquidation.

As such, affected customers must make a claim with the lender's liquidators for payment. The liquidators, Kieran Wallace and Eamonn Richardson of KPMG, have so far only been able to commit to paying 50 per cent of what's owned to IBRC's creditors.