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Sunday 4 December 2016

Test case may open floodgates in AIB tracker scandal

Finance

Bernard Byrne, chief executive of AIB
Bernard Byrne, chief executive of AIB

Thousands of AIB customers could have unwittingly lost their tracker mortgages, a leading debt adviser has claimed, following the news of a lawsuit against the bank over the denial of a tracker product.

Ross Maguire of debt management firm New Beginning said he thinks there are potentially thousands of AIB customers who fixed their mortgages for a defined period, but when that period expired they were not informed of their right to return to a valuable tracker product.

Tracker mortgages, which generally track the European Central Bank's (ECB) benchmark interest rate, proved incredibly valuable in the last five years as the ECB dropped interest rates to record lows.

The gap between the cost of a tracker mortgage and a mortgage on a standard variable interest rate is so dramatic that families need to earn an extra €12,500 a year to pay the difference, research has found.

Maguire's organisation, New Beginning, works with people in debt and specialises in mortgage arrears. His comments follow the launch of a lawsuit on behalf of one couple who claimed they should have been offered a tracker product after their fixed rate term expired.

"We view this as a test case which will have repercussions for other mortgage customers in similar situations," said Mr Maguire.

Compensation

The case appears similar to many of the claims against Permanent TSB, which culminated in a July apology by that lender, plus compensation for affected customers.

Maguire alleges that AIB omitted to tell many eligible customers exiting fixed products that they were entitled to move to trackers, starting around 2009.

When asked whether this practice took place at the bank, a spokesperson said: "We don't comment on court cases and we won't be making any comment on this."

However, when questioned earlier this month about whether he had concerns about the existence of cases at AIB similar to those discovered at Permanent TSB, chief executive Bernard Byrne said they would tackle similar issues "straight on".

"On the PTSB issue, what I would say on that is the circumstances around it and the way that situation evolved, I think, were unique," Byrne said.

"My commitment is that, were we ever to be in that situation, we have a very clear policy that we take it straight on. We deal with it professionally, put the customer in a situation where they are made good for any situation they are in, and then move on. I think that's the way you have to deal with it."

The Central Bank, which cracked down on Permanent TSB over its failure to inform some customers of their right to move on to a tracker rate, recently said it was looking at "industry-wide issues" with tracker mortgages.

Maguire, meanwhile, urged customers to look back at their mortgage documents and seek financial advice if they suspected they had unwittingly lost access to a tracker rate.

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