Cost of tracker mortgage scandal tops €1bn
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The total bill for tracker mortgage breaches by financial institutions came to around €1bn, as the Central Bank wrapped up its seven-year-long investigation into the scandal.
Banks spent around €750m in redress and compensation for their failings and €278m was issued in fines for regulatory breaches by seven banking institutions. There was also some added cost for carrying out the investigation.
“We all recognise that the redress and compensation cannot undo the harm done to customers and the distress caused to families and the customers who lost properties, particularly family homes,” said Derville Rowland, deputy governor of the Central Bank.
Mortgage brokers and industry observers have long pointed out that the fines and huge costs banks incurred during this investigation are effectively passed on to customers.
Experts have questioned a regulatory process that means that senior bankers have escaped personal censure for their part in a scandal that involved people losing their homes.
No individual was ever named or publicly sanctioned for their involvement in the scandal. There is currently one inquiry into a single individual who worked with Permanent TSB at the time of these breaches.
Approximately 40,000 customers were impacted by the scandal involving lenders removing the benefits of trackers from their customers more than a dozen years ago. The total number of properties lost was 327. The breakdown of this adds up to 98 private homes and 229 buy-to-let properties.
The Central Bank issued its final fine for this investigation to Bank of Ireland. The record fine of €100.5m was the largest sanction given to any institution associated with tracker failings.
Bank of Ireland’s failures resulted in the loss of 50 properties, including 25 family homes, which could have been avoided, said the Central Bank.
Bank of Ireland’s failings in respect of 16,000 tracker mortgage customer accounts happened between August 2004 and June 2022.
The Central Bank said there were six customers impacted by Bank of Ireland tracker mortgage breaches this year but these were not as “significant” as other breaches, which were more harmful to customers.
“We unreservedly apologise to all customers harmed by the tracker mortgage issue. The impacts were significant and wide reaching, up to and including loss of homes in the most serious of cases,” said Gavin Kelly, interim chief executive of Bank of Ireland Group.
The Central Bank’s original fine for Bank of Ireland was €143.6m, which was reduced by 30% to €100.5m in accordance with the settlement discount scheme provided for by the Central Bank.
This discount scheme was created to incentivise settlement with the banks that were investigated.
The sanction imposed is in addition to the more than €186.4m Bank of Ireland has already paid to impacted customers identified prior to and as part of the Central Bank’s Tracker Mortgage Examination.
The Irish Banking Culture Board (IBCB) said:
It added that its member banks have improved culture and behaviour, but "while there has been progress, there remains much to be done".