PTSB refunds legal costs to borrowers in hundreds of arrears cases

EBS has refunded 11,000 borrowers an average €400 in interest on legal and other third-party charges

Permanent TSB is making refunds of legal costs, averaging €2,400, to almost 400 borrowers who had been in arrears in the past, following a review of legacy cases.

The bank changed its approach last year to the management of third-party costs related to problem mortgages on foot of regulatory pressure.

The bank is also reimbursing interest charged on third-party costs in the past, a spokeswoman for the lender confirmed.

Typical amounts are around €260 in these cases, according to the spokeswoman, who was unable to say how many customers will receive such refunds as the review is ongoing.


“Starting in 2019, Permanent TSB updated its approach to legal and other third-party costs which arise in respect of the management of mortgage accounts in arrears,” the spokeswoman said.

“Since 2019, the bank applies legal costs in such situations at certain pre-determined points, i.e. when a settlement is reached with the customer, when the mortgage is redeemed or when an order for legal costs is made by the courts.”

The Central Bank ruled last November that mortgage lenders cannot impose legal fees on customers in arrears if they are co-operating and engaging with their lenders.

The regulator also concluded that charging interest on any legal costs applied is in contravention of the EU’s Consumer Mortgage Credit Agreements Regulations.

“Historically the bank applied such costs to the mortgage account when they arose, thereby attracting interest until paid off. This was a long-standing approach which was allowed for under the mortgage terms and conditions,” the PTSB spokeswoman said.


The spokeswoman said the bank decided to apply the new policy retrospectively “in the interest of fairness”.

“Where interest was charged on such third-party costs in the past it is now being reversed or reimbursed. Typically, the amounts involved are circa €260 and the review is ongoing.

“The review has identified some legacy accounts where the bank has decided to refund or reimburse the legal costs applied to the account (as such costs would not be charged to the account under the current policy). There are approximately 380 such accounts, and the typical repayment will be approximately €2,400,” she added.

Separately, a spokesman for EBS said the lender has refunded 11,000 borrowers an average of €400 in interest on legal and other third-party charges applied before engaging with the Central Bank last year.

A spokeswoman for KBC Bank Ireland, which has also added such charges to the accounts of arrears cases, said it was carrying out a review of the issue and engaging with regulators. She said any changes in the approach "will be communicated to customers as appropriate".

Spokespeople for AIB – which owns EBS – and Bank of Ireland said the Central Bank ruling last year does not apply to them as neither had a policy of applying legal costs to customer home loan accounts.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times