The Central Bank of Ireland has reprimanded and fined Bank of Ireland €100.5m for “significant and long-running failings” in respect of tracker mortgage customer accounts.
The Central Bank’s fine of €144m was reduced by 30% in accordance with the CBI’s settlement discount scheme.
The fine is the largest imposed to date by the Central Bank, and is in addition to €186m that Bank of Ireland has paid to impacted customers.
The Central Banks’ investigation into the treatment of 15,910 tracker mortgage customer accounts which were impacted between August 2004 and June 2022 found that Bank of Ireland’s failures resulted in the loss of 50 properties, including 25 family homes.
The CBI decided these would have been avoided if the bank had complied with “the most basic and fundamental of its consumer protection obligations”.
In Association with
Director of Enforcement Seána Cunningham, said: “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.
“There were a series of missed opportunities during which Bank of Ireland could have done the right thing by its tracker mortgage customers.
“Despite these opportunities, Bank of Ireland repeatedly interpreted unclear contractual terms in its own favour and against the customer, which continued the harm and loss caused to customers over many years.”
Cunningham added that the bank’s initial redress and compensation proposals failed to meet the Central Bank’s most basic expectations, as a result of which Central Bank intervention was required.
“Bank of Ireland’s approach resulted in the delayed payment of redress and compensation to customers and prolonged the detriment that they suffered,” said Cunningham.
“We expect firms to promptly make things right when things go wrong. Such a consumer-centric culture should not be viewed as a burden or an impediment. It can and must sit equally alongside a firm’s other business objectives.”
Unclear contract documents
The Central Bank deemed that the bank’s mortgage offer and authorisation contractual documentation was “unclear and ambiguous”, and that the bank failed to interpret the contract terms in the customers’ best interests.
Bank of Ireland repeatedly, over a period of over nine years, interpreted these unclear documents in its own favour and denied customers a tracker rate, according to the CBI.
The Central Bank view is that the bank should have warned customers that they would lose their tracker mortgage entitlements if they moved to a fixed rate or if they broke early from a fixed rate period.
The CBI noted that bank customers who complained were returned to a tracker rate. The regulator says it was “unfair” that other customers with the same unclear mortgage documents who did not complain were not offered a tracker rate.
Bank's apology
In response to the fine Gavin Kelly, interim chief executive of Bank of Ireland Group, said: “What took place in relation to tracker mortgages was wrong. It should never have happened. We are very sorry that it did.
“We unreservedly apologise to all customers harmed by the tracker mortgage issue. The impacts were significant and wide-reaching, up to and including the loss of homes in the most serious of cases.
“Banking is based on trust, but our failures damaged that trust. We have learned the hard lessons, and have taken steps to ensure we are a more customer-focused bank today.
“This work continues. Rebuilding the confidence of both our customers and the wider society we serve will take time, but we are committed to that journey.”
The Central Bank said that its firm-level investigations concerning tracker mortgage related issues has concluded.
Excluding customer compensation, the tracker mortgages issue also resulted in fines for AIB (€83m), EBS (€13m), PTSB (€21m), KBC Bank Ireland (€18m) and Ulster Bank (€37m).
The total tracker fines amount to €270m and they are paid to the Exchequer.
