A Permanent TSB offshoot has been fined €4.5m for 'serious failings' on tracker mortgages
The lender overcharged hundreds of customers as much as €68,000 on their accounts.
SPRINGBOARD MORTGAGES, a wholly-owned subsidiary of Permanent TSB, has been fined €4.5 million for failing to apply the correct interest rates on 222 tracker mortgages.
The firm was fined and reprimanded after it admitted to what the Central Bank dubbed as “serious failings”, which resulted in customers being overcharged up to €68,000 on their mortgage accounts.
The penalty follows an enforcement investigation which found significant breaches of consumer protection laws.
The Central Bank has also ordered the company to introduce a major redress and compensation programme, under which the firm has provided around €5.8 million to customers affected by the breaches.
The regulator’s investigation found that the company had failed to apply the correct interest rates to 222 customer mortgage accounts over a seven-year period between August 2008 and July 2015.
In doing so, the investigation concluded that Springboard failed to:
- Act with due skill, care and diligence and in the best interest of its customers;
- Effectively employ adequate and/or appropriate resources and procedures; and
- Have adequate systems and controls in place.
The failures were “significant and had serious consequences for impacted customers”, all of whom had to make higher mortgage repayments than required. The average amount overcharged was €19,351.
Further, the report found, the failures resulted in some customers going into mortgage arrears – and a number also being subjected to legal procedings.
Permanent TSB CEO Jeremy Masding
Lost homes
Last year, Permanent TSB and Springboard issued a joint statement to say that the two companies had written to nearly 1,400 mortgage holders to inform them about serious problems in the management of their loans.
It included an admission that as many as 22 customers who lost their homes would have been able to keep the properties if not for the failures.
Springboard was closed to new business in 2009 after the financial crisis took hold and in 2014 Permanent TSB sold on the sub-prime mortgage book to Mars Capital Ireland.
At the time, nearly three-quarters of €468 million loan book was classified as non-performing.
Derville Rowland, the Central Bank’s director of enforcement, said:
“Taking on a mortgage is one of the biggest financial commitments that a customer will make. Every mortgage customer must have trust and confidence that their account is being managed properly by the firm providing their loan.”
As part of the redress scheme, customers will be restored to the correct tracker rates, refunded any overpayments and given compensation to “reflect the detriment suffered by them as a result of the breaches”.
Reporting by Paul Hosford and Peter Bodkin
