Permanent TSB and its subsidiary Springboard Mortgages have been ordered to implement a comprehensive redress and compensation programme for 1,372 mortgage customers, following an enforcement investigation the Central Bank.

Impacted mortgage customers of Permanent TSB and Springboard Mortgages will receive letters over the next two weeks.

The Central Bank identified 'significant failures' associated with tracker mortgage options and rates. CBI said 1,152, are accounts of Permanent TSB with the remaining 220 being accounts of Springboard.

“The consequences of these failures are serious and include: mortgage overpayments; mortgage arrears; legal proceedings; and in certain cases loss of ownership of properties, including some homes,” said the Central Bank.

Impacted customers will be contacts by letter over the next two weeks. This is to set out specific details of the Mortgage Redress Programme as it applies to customers' individual circumstances.

In Association with

The Central Bank has required that a reduced interest rate be applied by Permanent TSB to all relevant impacted customers' accounts as an interim measure. This is to allow impacted customers sufficient time to consider their options.

CBI said Permanent TSB was at fault for failing to inform certain customers of the consequences of their decisions to break early from a fixed rate or discounted tracker period. The consequences of breaking early were that customers lost their contractual right to be offered a tracker rate in the future (at the time that their fixed rate or discounted tracker period would have ended).

The lender also failed to inform some other customers of their right to be offered a tracker rate at the end of any fixed rate period.

In the case of Springboard's impacted customers, the failure arose from the application of incorrect interest rates to mortgage accounts.

The key elements of the Mortgage Redress Programme are: rate change, redress, and compensation. A certain amount of money will also be provided to customers to obtain independent advice on the offer letter they will receive.

The Central Bank's Director of Enforcement, Derville Rowland, said: “The Central Bank considers the failures identified by Permanent TSB and Springboard to be very serious and their consequences to be completely unacceptable.

“To avail of the Mortgage Redress Programme, customers will have to engage with Permanent TSB and respond to the letter which they will receive. We encourage impacted customers to consider their letter of offer and options carefully.

Jeremy Masding (left), group chief executive of Permanent TSB Group Holdings, and chairman Alan Cook

"We also encourage customers to use the money provided by Permanent TSB or Springboard to obtain independent advice. The Central Bank will continue to pursue its enforcement investigations against both Permanent TSB and Springboard.”

Alan Cook, chairman of Permanent TSB Group Holdings, and Jeremy Masding, group chief executive, have described the failure by Permanent TSB as “deeply regrettable”.

In a joint statement they said: “The failures which occurred have had very serious consequences for impacted customers and we apologise unreservedly on behalf of the group to them and to all our customers.

“We are truly sorry that this has occurred and our absolute focus now is on correcting the position of every impacted customer as speedily as possible.”

Cook and Masding said that Permanent TSB was particularly focused on 61 accounts where impacted customers lost ownership of their properties.

They added: “We acknowledge that the bank’s failure may have been a factor in events that ultimately led to some customers losing the property linked to the mortgage. We will do everything in our power to help these customers.”

Redress

Permanent TSB said that interest rates on impacted accounts have already been reduced to the level they would be at if the customer was on the relevant tracker rate mortgage. This interim arrangement will continue until November 30 2015, to allow the impacted customers time to consider their options, including whether they want to move to the relevant tracker mortgage rate.

The bank is also adjusting the balances for affected customers to put the accounts in the position they would now be in if the customers had been on the relevant tracker rate, paying out refunds and compensation where necessary.