Bank of Ireland has been fined 100 million euros by the Central Bank for willfully denying thousands of its customers good-value follow-on mortgages.
It is the largest fine imposed on a lender in the regulator’s mortgage investigation, with Bank of Ireland the latest lender to be fined for its role in the scandal.
The bank let nearly 16,000 customers down by denying them a tracker or putting them on the wrong tracker rate at a time when mortgage rates were rising.
The Bank of Ireland bankruptcies resulted in the loss of 50 properties, including 25 family homes, which would have been avoided had Bank of Ireland complied with its most basic and fundamental consumer protection obligations, said the Central bank.
The Bank of Ireland has fully acknowledged 81 separate regulatory breaches.
We unreservedly apologize to all customers adversely affected by the mortgage tracker issue.
The Central Bank determined the appropriate fine at €143.6 million, but this was reduced by 30% to €100.5 million in accordance with the settlement discount system provided for in the rules of the Central bank.
It is the largest fine to date imposed by the Central Bank and comes on top of more than €186.4 million that Bank of Ireland has already paid to affected customers identified before and in connection of the Central Bank Mortgage Tracker Review.
Over the summer, AIB and its EBS unit were fined almost €100 million for denying people mortgages.
The AIB Group wrongly denied nearly 13,000 borrowers their right to then-cheap mortgages linked to the European Central Bank’s main rate.
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Acting Chief Executive of Bank of Ireland Gavin Kelly. Photo: Frank McGrath
Bank of Ireland has been forced to compensate 15,900 tracker customers, the most of any lender who has mishandled tracker cases so far.
These cases include people who were wrongly denied a tracker and owners who did not have the correct tracker rate.
Gavin Kelly, Acting Chief Executive of Bank of Ireland, said: “Today’s statement from the Central Bank of Ireland is extremely critical of Bank of Ireland. We understand – and fully accept – why this is so.
“What happened with tracker mortgages was a mistake. It should never have happened. We are so sorry that it happened.
“We unreservedly apologize to all customers adversely affected by the mortgage tracker issue. The impacts have been significant and widespread, including the loss of homes in the most severe cases.
“The bank is built on trust, but our failures have damaged that trust. We have learned the hard lessons and taken steps to ensure that we are a more customer-focused bank today. This work continues. Rebuilding the trust of our customers and the wider society we serve will take time, but we are committed to it.
The tracker scandal dates back to 2008 and affected almost all mortgage lenders.
In some cases, banks have misinterpreted legal or contractual terms, depriving some customers of their right to a tracer.
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The offices of the Central Bank of Ireland in Dublin’s Docklands. Photo: Jason Alden/Bloomberg
Banks also failed to warn customers of the consequences of dropping their trailing mortgage to a fixed rate for a period. These people were told at the end of the fixed period that they could not return to their value-for-money tracker.
In June, the Central Bank fined AIB Group 96.7 million euros for its failures to protect consumers during the mortgage tracker scandal.
A tracker mortgage is a type of home loan where the interest rate charged on the mortgage tracks that of another publicly available rate, usually the interest rate set by the ECB.
The five main banks implicated in the Irish mortgage scandal are AIB, KBC, Permanent TSB, Bank of Ireland and Ulster Bank. EBS, a subsidiary of AIB, and Springboard Mortgages, a subsidiary of Permanent TSB, were also implicated.
Around 40,000 customers were wrongfully removed from their tracker mortgages and switched to a higher interest rate. In many cases, people lost their homes because of the scandal.
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