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Tracker Scandal

'Unacceptable harm': The scandal that led to a record fine for one of Ireland's pillar banks

Permanent TSB has been fined €21 million for regulatory breaches affecting tracker mortgage customers.

THE TRACKER MORTGAGE was the subject of a common joke in Ireland back in 2007, after the Financial Regulator ‘s infamous TV advertisement.

Ten years later ‘I don’t know what a tracker mortgage is’ was no longer a laughing matter as it emerged tens of thousands of people had been overcharged or denied the right to a tracker rate. In some cases people lost their homes as a direct result of their bank’s actions.

A tracker mortgage offers a fixed rate added onto the European Central Bank’s moving interest rate. This product functioned well until the bank crash in 2008 and many customers arranged to move off a tracker and onto either a fixed or variable rate for a period of time.

Issues first became apparent back in 2012 when the High Court upheld a decision by the Financial Services Ombudsman in relation to complaints made by two couples who were Permanent TSB customers and who had tracker mortgage issues. The bank launched an appeal to the Supreme Court.

In 2015 it withdrew this and announced it would review another 80 similar complaints. In total, Permanent TSB and Springboard, an offshoot of the bank, paid €43 million in redress and compensation to more than 7,000 impacted customers.

In October of that same year, the Central Bank announced an examination of across 15 institutions to assess whether the problem was more wide-spread. 

Figure began to emerge from the banks the following year – AIB said at least 14 people had lost their homes as a result of the scandal, Bank of Ireland had identified 602 accounts impacted by overcharging and the Central Bank at this time had estimated some 8,200 customers had been affected. 

In April 2017, the first customer affected by the scandal went public. reported that widowed father-of-five Raymond Flavin was being pursued by Bank of Ireland through the courts – despite the fact that it admitted he was an impacted customer. This case is still before the courts.

The appearance at a meeting of the Oireachtas Finance Committee in October 2017 of four customers who believed they were impacted was a turning point in the controversy.

They shared stories of the stress and financial hardship the scandal had caused. Niamh Byrne, an Ulster Bank customer, told the committee that it had been nine years since the bank first refused her a tracker rate that she was entitled to. 

“It has been extremely stressful, it has a huge impact on my finances,” she told the committee.

Financial advisor Padraic Kissane also gave evidence to the committee that day, telling members that if everyone who was truly impacted by the errors was included in the Central Bank’s examination, the figure would pass 30,000.

Niall Carson / PA Niall Carson / PA / PA

It was not long before Kissane was proven correct as the figures the banks released continued to increase. 

AIB in June last year confirmed more than 11,700 of its customers had been impacted. Ulster Bank identified more than 3,400 affected customers. More than 10,000 Bank of Ireland customers were impacted.

In February, the Central Bank confirmed that in total 39,800 affected customers had been identified by its examination. So far, lenders have paid out €647 million in redress and compensation. 

Today the Central Bank confirmed it has fined Permanent TSB a record €21 million for regulatory breaches affecting tracker mortgage customers. There are a number of enforcement investigations ongoing in relation to the tracker mortgage scandal and other financial institutions are expected to be fined.

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.

Chief Executive of Permanent TSB, Jeremy Masding today apologised to the 2,007 customers affected and for the distress caused.

He said the bank has invested heavily in “enhancing the organisation’s risk management and control environment”. 

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