THREE MONTHS AGO the Irish Central Bank confirmed almost 10,000 accounts had been impacted by the tracker mortgage scandal, which saw customers denied tracker rates and paying higher interest rates than stipulated in their agreements.
The Central Bank also revealed last month that €78 million had been paid out in redress and compensation to 2,600 accounts to date.
Lenders have been given until the end of September this year to identify all impacted customers. Figures from some of the banks have trickled out slowly since news of the overcharging story first broke.
We know, for example, that Bank of Ireland in December last year confirmed overcharging on almost 4,000 accounts.
AIB’s chief executive Bernard Byrne also told an Oireachtas Committee that 14 of the bank’s customers lost their homes because of high interest rates handed down, This bank had previously revealed up to 3,000 customers were affected by the overcharging scandal.
Some of the lending institutions listed in the Central Banks’s report last March have not yet given any indication of how many of their customers accounts they have identified as part of these reviews. And just three months off the deadline, few have issued updates on their initial estimates.
In response to a query, Bank of Ireland directed us to its December 2016 update in which it said it had identified 602 accounts where a right to, or option of, a tracker rate was not provided in accordance with a customer’s loan documentation.
It also found a rate differential, of an average 0.15%, on 3,916 accounts that are currently on a tracker rate which is not the rate specified on their loan documentation.
When asked for an update on progress made by the bank in reviewing accounts and compensating customers, a representative said “December’s statement is the most recent update on the programme”.
Ulster Bank referred us to a note on their website outlining their review.
“While our review is ongoing, we have identified a group of tracker mortgage customers who have been affected by the use of ambiguous and confusing terminology in our mortgage documentation,” the statement said.
It said the first steps it was taking to remedy the situation is correcting interest rates on these accounts. It also said it would implement a redress and compensation programme in respect of those customers.
After a subsequent query, a spokesperson for the bank failed to provide any specific figures for affected customers or compensation paid out.
When asked this week for an update on Permanent TSB‘s redress scheme, a representative for the bank said it “had no further updates at present”.
The last update on the bank’s website in relation to its mortgage review is from September 2015. In this press release, it referenced 1,000 customers in the bank who were found to have lost a contractual right to a tracker mortgage.
CEO Jeremy Masding committed to a “thorough review” and said the bank would take whatever steps necessary to correct errors. Masding said in November last year that the bank had set aside €145 million to repay customers.
The bank’s spokesperson failed to respond to further requests this week for an update on progress made by the bank in this “thorough review” since September 2015.
Danske Bank confirmed it is carrying out a review of tracker mortgage rates but did not address a request for information about the number of customers it had identified as being affected by this issue.
“At this stage, the bank review is ongoing and has yet to be completed,” it said.
KBC similarly said it is continuing to engage with the Central Bank as part of its review process. A spokesperson said it is working with Deloitte as independent third parties.
This spokesperson also did not provide specific figures.
Recent updates
AIB reverted back to its March results, in which it stated it had written to, apologised and redressed around 2,600 customer accounts. It also said it was in the process of addressing a further 400 impacted customer accounts, which will be complete at the end of this month.
“As detailed at the Oireachtas committee in November, customers under the redress programme have been offered a reversion to their original tracker rate,” a spokesperson said. They added that this review is ongoing.
Leeds Building Society, which was named in the Central Bank’s report as one of the lenders it had written to in the course of its examination, said it had been required to review all of its tracker mortgages.
“The Central Bank of Ireland has confirmed Leeds Building Society met its contractual and consumer protection obligations to these borrowers and it did not raise any further queries in this regard,” a spokesperson said.
Central Bank enforcement action
In response to a query from TheJournal.ie seeking an update on this investigation and figures provided to the Central Bank by each lender, the bank described this as “the largest, most complex and significant supervisory review” it has undertaken to date in respect of its consumer protection mandate.
The bank said it involved an initial review of more than two million mortgage accounts by lenders to identify the number of in scope accounts. However, it declined to release specific figures.
Data in the report is provided on an aggregate basis, so that individual firms cannot be identified as due to statutory confidentiality requirements, the Central Bank may not publicly disclose much of its supervisory engagement with individual firms.
Paul Joyce, senior policy analyst at the Free Legal Advice Clinic said it was disappointing that neither the lenders nor the Central Bank were making this kind of detailed information about their reviews readily available.
“There are a certain number of people who will be in a position, or already have legitimately argued that taking them off their tracker has directly or indirectly led to the repossession of their family home,” he said. “And this is not just monetary loss, it’s everything that transpired after that.”
The Central Bank said it continues to engage with lenders in respect of the conduct of the examination. It also said it will consider supervisory action, up to and including enforcement action.
“In the enforcement investigations, the Central Bank will consider all possible angles, including potential individual culpability, and will thoroughly investigate and analyse these matters in the context of the legal framework.”
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