ULSTER BANK HAS been fined nearly €38 million by the Central Bank of Ireland for regulatory breaches relating to its role in the industry-wide tracker mortgage scandal.

In a statement this morning, the Central Bank said that Ulster Bank’s behaviour caused “unacceptable and avoidable harm to its impacted tracker customers”. Its conduct resulted in the loss of 29 family homes and 43 properties in total, according to the statement.

The NatWest-owned bank admitted to 49 separate breaches relating to, among other things, its failure to provide clear information about tracker mortgage entitlements to customers.

It’s understood to be the largest fine the Central Bank has ever levied against a regulated entity.

Initially, the regulator determined that the appropriate fine was €53,963,600. But because Ulster Bank ultimately accepted the findings of the investigation, the fine was reduced by 30% to €37,774,520 in accordance with the Central Bank’s settlement discount scheme.

Seána Cunningham, the Central Bank’s Director of Enforcement and Anti-Money Laundering, said that “the avoidable harm” that Ulster Bank caused for customers is at the heart of the enforcement action.

Over an extensive period, Ulster Bank denied customers their tracker mortgage entitlements in relation to 5,940 mortgage accounts, resulting in significant and widespread overcharging. At the most serious end of the detriment caused to Ulster Bank’s customers, 43 properties were lost, 29 of which were family homes, as a direct consequence of Ulster Bank’s actions.

“Our investigation identified the numerous opportunities that Ulster Bank had to do right by its customers and the efforts that Ulster Bank went to in order to evade its obligations to these customers.

“Despite it being clear to Ulster Bank from customer complaints that certain customers were paying more for their mortgage than they should be, Ulster Bank continued to deny customers the lower tracker rates that they were entitled to,” Cunningham said.

Ulster Bank chief executive Jane Howard, in a statement this afternoon, apologised on behalf of the lender, which she says has learned “serious lessons” from the controversy.

“On behalf of Ulster Bank, I am deeply sorry for the impact that our handling of the tracker mortgage issue has had on our customers and their families. These customers placed their trust in us, and I regret the impact our failings have had on their personal lives, especially those customers who lost their homes,” Howard said.

“Today’s announcement does not draw all tracker issues to a close and we will continue to work on those cases which are under appeal or are with the Financial Services and Pensions Ombudsman to bring them to a conclusion.”

The fine comes on foot of similar enforcement actions against Permanent TSB and KBC Bank, which were fined €21 million and €18 million respectively over their handling of the tracker scandal.

Investigations into AIB and Bank of Ireland are ongoing. 

Last month, NatWest announced plans to gradually wind down Ulster Bank operations in the Republic of Ireland over the coming years.

‘A deliberate strategy’

Ireland’s tracker mortgage scandal dates back to the crash when banks tried to force customers off loss-making tracker rates and onto more expensive fixed-rate mortgages.

Issues first became apparent back in 2012 and in 2015, the Central Bank announced an examination of 15 institutions to assess the breadth of the issues.

The investigation found that, between August 2008 and October 2008, Ulster Bank deliberately devised and implemented a strategy to entice customers off tracker rates as part of a customer contact campaign.

“Ulster Bank knew that if, as a result of the campaign, customers opted to enter a fixed rate they would be unable to return to their original tracker rate at the end of the fixed rate period,” the Central Bank said.

“Despite this, Ulster Bank did not make clear to customers that they would be unable to return to their original tracker rate.”

In relation to that campaign, the bank admitted to two regulatory breaches, including a failure to ensure full disclosure of all relevant material information to customers.

In the course of its probe into Ulster Bank, the Central Bank said it found that a large group of 3,392 tracker customers who moved to fixed rates for a period of time “were provided with documents that did not clearly set out the default rate on expiry of the fixed-rate period.

The effect was that customers were “making decisions to move away from their tracker rates without being provided with clear information on the consequences” of their decision.

Not only that but Ulster Bank “deliberately devised and implemented a policy” whereby those 3,392 customers would only be returned to their correct tracker rates if they complained.

Complaints were dealt with on a case-by-case basis, the regulator found, with the bank offering different levels of redress for different customers. As result, not all of the impacted customers received their correct redress and compensation until the Central Bank required Ulster Bank to do so.

In relation to this “deliberate strategy”, Ulster Bank admitted to four breaches of regulations.

Ulster Bank also failed to make sure its operational systems and controls were sufficient to ensure that its customers were provided with their correct tracker mortgage entitlements.

Ulster Bank was aware of the customer complaints from 2009 onwards, the Central Bank said, but failed to disclose the issue to the regulator.

“Furthermore, when the full extent of the issue was clear to Ulster Bank, it actively sought to avoid Central Bank intervention due to concerns about its financial exposure should it have to remediate all impacted customers,” it said this morning.

This coupled with the fact that the NatWest-owned lender “failed to meet the Central Bank’s expectations of adequate co-operation” during the investigation were treated as “aggravating” factors.