herald

Wednesday 17 January 2018

Central Bank 'concern' at failure by banks over tracker compensation

The Central Bank’s deputy governor Ed Sibley
The Central Bank’s deputy governor Ed Sibley

Banks are refusing to compensate some customers who they denied a tracker mortgage, with other lenders making "unacceptably low" offers of compensation.

Two lenders have also failed to properly identify affected customers, the Central Bank said.

A new update from the regulatory authority has exposed efforts by banks to avoid restoring people illegally stripped of trackers and refund them.

In an update on the tracker scandal, the Central Bank said more than 100 families and investors lost their houses due to banks denying them a low-cost tracker.

Another 3,000 cases have been admitted by banks, where mortgage holders should have had a tracker, or were given the wrong interest rate on their tracker, the Central Bank said.

Lenders are supposed to restore affected customers back to their cheap tracker rates, refund the over-payments and pay compensation.

The regulator said it has forced two unnamed lenders to go back and reconsider how they are carrying out their overcharging probe.

"The Central Bank is concerned that two lenders may have failed to identify populations of impacted customers or failed to recognise that certain customers have been impacted by their failures," it said in a statement.

Just a quarter of customers have received the money they are owed due to issues around their tracker, as well as being compensated for it.

This is because just three lenders have started their redress programmes. Only three have established their appeals process.

Change

Central Bank deputy governor Ed Sibley said in an address to bankers that they needed to change their approach.

"Governance issues remain prominent and there is strong evidence - none starker than in some banks and their approach to the tracker issue - that cultural change is still necessary," Mr Sibley said.

Two years ago, the Central Bank told 15 lenders to probe their mortgage books to identify customers wrongly denied a good-value tracker during the financial collapse.

Now, an extra 3,000 cases of tracker loss have been identified since March. This takes the total to 13,000, the Central Bank said.

Another 7,100 cases have already been settled, including 1,300 Permanent TSB cases, from a total of more than 20,000 cases.

The Central Bank said the numbers will rise further, with some estimates putting the eventual total at 30,000.

Most homeowners were wrongly denied a tracker rate after opting for a fixed-rate for a period. Another 40pc kept their tracker but were put on the wrong margin.

The Central Bank said 23 residential mortgage holders lost their homes due to the "failings" of lenders. Another 79 buy-to-let properties were lost.

In a briefing note, the Central Bank warned: "As lenders' analyses continue, this number will rise."

Promoted articles

Entertainment News