Bank of Ireland fined record 101 milllion euros for mortgage overcharging

Of the 15,910 individuals impacted by the institution's failings, 50 lost their properties as a result being unable to meet their repayments



By Reuters

Published: Thu 29 Sep 2022, 1:26 PM

Bank of Ireland was fined a record 100.5 million euros ($97.04 million) by the country's central bank on Thursday for overcharging customers denied mortgages that track base rates, the final lender to be reprimanded in a years-long probe.

The rebuke for Ireland's largest bank by assets brought to 279 million euros, the amount all banks have been fined for failing to offer a mortgage that tracked the European Central Bank rate that had been at or close to zero for almost a decade.

Bank of Ireland, which had set aside 120 million euros by the end of June to cover any additional costs from the probe, said in a statement that what took place was wrong, should never have happened and that it was very sorry that it did.

It admitted in full to 81 separate regulatory breaches.

Ireland's other dominant lender, AIB and its EBS subsidiary were fined 96.7 million euros in June under the probe which was launched in 2015.

Irish banks have also paid out around 730 million euros to compensate some 40,000 borrowers who were denied the product that was widely offered during the housing boom in the mid-2000s and withdrawn for new customers when the financial crisis hit.

When banks withdrew the tracker products for new customers, they failed to offer a tracker rate to its existing customers who had contractual entitlements allowing them to a return to a tracker rate in their mortgage agreements.

Of the 15,910 individuals impacted by Bank of Ireland's failings, 50 customers lost their properties as a result being unable to meet their mortgage repayments.

"Our investigation exposed a culture in Bank of Ireland which, when faced with a choice, prioritised its own interests with little to no regard for the impacts on its customers," Irish Central Bank Director of Enforcement Seána Cunningham, said in a statement.

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Cunningham said Bank of Ireland's initial redress and compensation proposals failed to meet the regulator's most basic expectations, requiring it to intervene and "prolonging the detriment that customers had suffered."

NatWest's Irish unit, Ulster Bank, was also fined 37.8 million euros over the same issue, with local lender permanent tsb and Belgian financial group KBC fined 21 million euro and 18.3 million euro respectively.


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