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'Under-collection error' means 1,300 Ulster Bank customers face €41m bill

Mortgage customers at the bank were under-charged in recent years resulting in the shortfall that will now need to be repaid by these customers. The bank has apologised.

Image: Niall Carson/PA Wire

Updated 1.50pm

AN UNDER-COLLECTION error at Ulster Bank means that 1,300 of the bank’s mortgage customers face a bill of around €41 million after they were under-charged in their repayments over a number of years.

Ulster Bank has apologised to affected customers and outlined details of repayment options this afternoon. The banks said that amounts due from each customer would be dependent on the terms of their mortgage.

The Central Bank has confirmed in a statement that the error resulted from a failure to move customers to full capital and interest payments after an initial interest-only period on their mortgage repayments expired.

The error arose from a transfer of First Active mortgage customers to Ulster Bank. Some of these customers were given a “holiday” on capital repayments for between two and five years.

The bank says that in a “small number” of cases the bank did not end this “holiday” for these customers and the interest-only repayments continued, resulting in the €41 million shortfall which theoretically equates to over €31,500 for each of the 1,300 customers affected.

But the bank said that the amount of capital due from the “under-collection error” would be dependent on each customer’s circumstances and there would be no additional interest as a result of the amount due.

Ulster Bank said in a statement to TheJournal.ie this afternoon that impacted customers are being given four options to repay the amount due.

These include:

  1. Availing of an interest free loan equal to the under-collected amount to be paid over time
  2. Term extension to mortgage, subject to standard lending criteria, and start to pay down capital and interest
  3. Repaying the amount owed over the current term and start to pay down capital and interest
  4. Repaying the amount owed in a lump sum payment and start to pay down the remaining capital and interest

The bank also said that where a customer is in financial difficulty they will be treated in accordance with the bank’s Mortgage Arrears Resolution Process.

A statement said: “We apologise to any customers impacted by this, and it is our primary objective to ensure customers affected are treated fairly, and returned back to the position they would have been in should this error not have occurred.”

Ulster Bank released details on foot of a story in today’s Irish Independent which first revealed the error. The bank was also required under the Consumer Protection Code to notify the Central Bank of Ireland (CBI)

The CBI said in a statement that impacted customers will be “afforded ample time to make repayments” and will have a number of options for repayment.

It added that those impacted who experience difficulty making revised payments “will be treated sympathetically”.

“This will include all protections afforded by the Code of Conduct on Mortgage Arrears (CCMA) where relevant,” the Central Bank said, adding: “Impacted customers who are currently in arrears will also be afforded the protections of the CCMA where relevant.”

The CCMA sets out a framework for lenders to engage with borrowers on mortgage arrears and theoretically requires lenders to handle cases “sympathetically and positively” while at all times helping borrowers to meet their obligations.

The Central Bank also said that Ulster Bank will write to impacted customers regarding their own specific circumstances and what action they need to take. Customers can also contact the bank’s specialist team on 1800 303 352.

Read: Ulster Bank fined €1.9 million by Central Bank

Read: Ulster Bank IT failure cost bank over €100 million

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About the author:

Hugh O'Connell

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