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Permanent TSB fined record €21 million over tracker mortgage scandal

PTSB has apologised “unreservedly” to the customers affected by the tracker mortgage scandal.

Image: Sasko Lazarov/Photocall Ireland

PERMANENT TSB HAS been reprimanded and fined a record €21 million by the Central Bank for regulatory breaches affecting tracker mortgage customers. 

The €21 million fine was handed down under its Administrative Sanctions Procedure in respect of “serious failings to 2,007 tracker mortgage customer accounts which were impacted for the period between August 2004 and October 2018.

This figure reflects a gross fine of €30,000,000 reduced by 30% to €21,000,000 in accordance with the early settlement discount scheme provided for in the Central Bank of Ireland’s Administrative Sanctions Procedure.

In addition, PTSB has also been required to pay €54.3m redress and compensation to its impacted customer accounts.

The tracker mortgage controversy saw customers being overcharged by their lenders when they were either denied a tracker rate they were entitled to, or charged the wrong rate of interest on their mortgage.

This fine is the largest imposed to date by the Central Bank under the ASP. It said the hefty fine reflects “the gravity with which the Central Bank views PTSB’s failings and the unacceptable harm PTSB caused to their tracker mortgage customers”. 

In a statement today, the Chief Executive of Permanent TSB, Jeremy Masding said:

On behalf of Permanent TSB, I apologise unreservedly to all customers affected by the Tracker Mortgage issue, and for the distress caused as a result.

Masding added that “building on the lessons learnt from this issue, Permanent TSB has invested heavily in enhancing the organisation’s risk management and control environment”.

‘Failed in their obligations’

The Central Bank’s investigation into PTSB’s tracker related issues, which was conducted alongside its Tracker Mortgage Examination (TME), found that the bank had denied its customers a tracker mortgage or did not put them on the correct tracker rate resulting from a number of failings.

According to the Central Bank, PTSB has admitted in full to 42 separate regulatory breaches of the Code of Practice for Credit Institutions 2001 and the Consumer Protection Codes 2006 and 2012.

The breaches occurred broadly in the following ways. 

  • As a result of PTSB’s failure to warn certain customers about the consequences of decisions relating to their mortgage;
  • As a result of PTSB’s operational and systems failings;
  • As a result of a decision by PTSB to deny certain customers their correct tracker rate between 2009 and 2010; 
  • As a result of PTSB’s incorrect legal interpretation of contractual terms and conditions.

The Central Bank’s Director of Enforcement and Anti-Money Laundering, Seána Cunningham, said that the investigation into PTSB found that they had “failed to put their customers first, with distressing and, in some instances, devastating consequences”. 

PTSB failed in their obligations to do the right thing by their customers. In doing so, they broke the trust of their customers and damaged the public’s confidence in PTSB.

“At a minimum, customers should be provided with clear and timely information and warnings about their mortgage, the highest levels of customer service and a commitment from their lender to put things right promptly and fairly should they go wrong.”

Cunningham warned that where firms fail to protect their customers’ best interests, the Central Bank’s response will be “robust and the consequences will be serious”.

Appearing before the Oireachtas Finance Committee in April, PTSB’s Masding said that bank should be fined by the Central Bank, stating that the bank would engage with the Central Bank as to the scale of the fine.

“The fine will be as it should be and we will pay it as it should be,” said Masding.

He also told the Committee that no one had lost their job in the bank over the scandal, stating that it was found the error was “not a deliberate action” but was a lack of control and oversight by the bank.

With reporting from Christina Finn 

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