Bank of Ireland fined €100.5m over tracker scandal

Bank of Ireland has been fined €100.5 million by the Central Bank for its handling of its tracker mortgage customers.

This is the largest fine ever imposed by the Central Bank.

The regulator said 15,910 tracker mortgage customer accounts were affected by the bank’s actions between August 2004 and June 2022.

The Central Bank found that Bank of Ireland bankruptcies led to the loss of 50 properties, including 25 family homes.

The Bank of Ireland has fully acknowledged 81 separate regulatory breaches.

The Central Bank imposed a fine of €143.6 million on the Bank of Ireland, but this was reduced by 30% under the settlement discount scheme.

The regulator’s investigation found that Bank of Ireland provided unclear contract documents to its customers, failed to interpret its unclear contract documents in the interests of customers and failed to warn customers of the consequences of decisions relating to their mortgages.

It also had an unfair practice of handling customer complaints and had deficient mortgage systems and controls, which contributed to a significant number of operational errors.

The investigation also found that the bank wrongly excluded customers from Tracker Mortgage Review protections.

The fine comes on top of more than €186.4 million that Bank of Ireland has already paid to affected customers identified before and as part of the Central Bank’s Tracker Mortgage review.

Following the announcement, the Bank of Ireland apologized to customers for what it described as a “wide range” of failures in relation to the tracker mortgage issue.

“We unreservedly apologize to all customers adversely affected by the mortgage tracker issue,” Gavin Kelly, acting chief executive of Bank of Ireland, said in a statement.

“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,” he added.

Mr Kelly said the bank had learned ‘difficult lessons’ and taken steps to ensure a ‘more customer-centric bank’ today.

“This work continues. Rebuilding the trust of our customers and the wider society we serve will take time, but we are on this path,” he said.

Earlier, a member of the Irish Banking Culture Board said the controversy over tracker mortgages – when banks withheld tracker rates from certain customers – had led to “carnage”.

Speaking on RTÉ’s Morning Ireland, Padraic Kissane said: “It’s had a dramatic effect on these customers, particularly in families.

“There was carnage [with] such as the loss of family homes, the loss of rental properties and the withdrawal of money at a time when it was needed.”

The controversy began after banks withheld trailing rates from customers who qualified for them – or put them on the wrong rates – when the financial crisis began more than a decade ago.

This is because the products were starting to cost the lenders money.

Mr Kissane, a financial adviser and member of the Irish Banking Culture Board, said the fine imposed on the Bank of Ireland today should be “tempting” on the basis of previous fines imposed on other banks.

He said some of the findings released today will be quite upsetting for affected customers, but dramatic for everyone else too.

He hoped something like this wouldn’t happen again. “We need strong banks. We need good banks but the culture to do what they have done, I think lessons have been learned.”

Mr Kissane said the new executive regime would impose accountability on individuals and that “a lot of the reasons for what happened probably wouldn’t be there today, you hope”.

He added that the message for banks should be “if they put their customers first, none of this would have happened… I think that should be the mantra going forward.”