23 people lost their homes because of the tracker mortgage scandal

THE CENTRAL BANK has revealed 23 people lost their homes as a direct result of the tracker mortgage scandal.

The scandal, which first emerged in 2015, saw customers either denied a tracker or charged the wrong rate on their mortgages.

In its latest update on the investigation into the saga, the Central Bank said the types of detriment identified range from overcharging due to the application of incorrect interest rates up to the loss of ownership of mortgaged properties.

A total of 102 people lost ownership of their properties – 23 were primary dwelling homes and 79 were buy-to-lets.

Today’s update on the investigation provided a number of revised figures:

• 13,000 impacted accounts identified;
• 60% of these arise as a result of customers not receiving a tracker product;
• 40% arise from customers not receiving the correct tracker margin;
• 98% have been returned to the correct rate;
• Three lenders have commenced payment of redress and compensation;
• 3,300 customers have received redress/compensation.

Since the investigation began back in December 2015, €120 million has been paid out by financial institutions.

This is in addition to the €36.8 million and €6.2 million already paid out by Permanent TSB and Springboard – an offshoot of PTSB – before this examination, bringing the total figure to €163 million.

‘Fell short’

The Central Bank said all relevant lenders have provided Phase 2 reports, but two of them are undertaking further review work and are to submit additional information for their recent updates.

It said it is challenging these two, unnamed lenders to ensure this review work is completed without delay.

All lenders have also submitted redress and compensation proposals for assessment. A number of these proposals “fell short” of the Central Bank’s expectations.

It found some:

• Failed to offer compensation for certain impacted cohorts of customers;
• Made unacceptably low offers of compensation;
• Made unacceptably low payments for independent advice;
• Failed to acknowledge certain types of detriment sustained by impacted customers, including customers who switched lenders as a result of being on the incorrect interest rate, for compensation purposes.

“These material deficiencies necessitated the Central Bank to challenge lenders repeatedly to improve their proposals, and has resulted in lenders significantly improving both their redress and compensation proposals and their appeals processes, to the benefit of impacted customers,” the regulator said.

Not impacted

Its primary focus in this next phase of the investigation is on customers who were deemed not impacted.

It has already challenged two lenders who it said may have failed to identify populations of impacted customers or failed to recognise certain customers were impacted by their failures.

“The Central Bank is of the view that certain of these customers are in fact impacted and accordingly entitled to redress and compensation,” its latest update said.

Last week, financial advisor Padraic Kissane told the Oireachtas Finance Committee that be believes the scale of this scandal has been under-reported.

Kissane has a number of clients who have been told by their banks that they are not impacted and he claims their mortgage documentation proves otherwise. The Central Bank’s latest update on the scandal indicates the regulator may agree with him.

These two lenders are due to revert to the Central Bank by the end of this month and the above figures are therefore expected to change. Other lenders will be similarly challenged as the Central Bank’s experts review their work.

Lenders involved in this investigation are required to have an appeals process in place in advance of making redress and compensation offers. Three institutions have now established appeals processes.

Currently, there are two ongoing enforcement investigations into tracker mortgage-related issues arising in Permanent TSB and Ulster Bank and two further investigations into other lenders are in train.

Springboard Mortgages has already been fined €4.5 million in respect of failures relating to tracker mortgages.

The Central Bank said it expects all lenders will have commenced providing redress and compensation to customers identified as impacted to date by the end of this year.

Philip Lane, the governor of the Central Bank, will appear before the Oireachtas Finance Committee tomorrow to provide an overview of the investigation so far.

Written by Michelle Hennessy and posted on TheJournal.ie