Regulator to investigate treatment of tracker-mortgage holders in all banks

The Central Bank has decided to launch an in-depth investigation of mortgage tracker lending by Irish banks following the recent scandal with Permanent TSB, where 1,372 customers were charged the wrong rate from 2006 onwards.

This follows a request on September 24th by the Oireachtas finance committee for an investigation of all Irish banks to determine if they have overcharged customers or incorrectly denied them access to a tracker rate.

It is understood that the Central Bank informed the committee yesterday about its plans for this sector-wide review.

Transparency

In a statement last night, the Central Bank said it had written to all lenders notifying them of its intention to conduct a “broader examination of tracker mortgage-related issues covering ... transparency of communications with and contractual rights of tracker mortgage borrowers”.

In July, PTSB admitted to a “serious failure” in how it managed interest rates on certain mortgage accounts. This followed a Central Bank investigation. It faces a hefty fine from the regulator for the failure. The Central Bank said the fair treatment of tracker borrowers was a “key supervisory and policy focus” for the organisation. “Since 2010, we have identified and pursued a number of lender-specific issues in relation to transparency for borrowers who opted to switch from their tracker rates or who had the right to revert to a tracker rate at the end of a fixed rate period,” it said.

“This has resulted in the use of supervisory powers, including the administrative sanctions procedure, redress and compensation schemes for those borrowers who suffered detriment or loss as a result of their lenders’ practices.”

The Central Bank remains “concerned that there may be other tracker-related issues that could be impacting on consumers across the system”.

“We are currently engaging closely with a number of lenders on points of concern relating to their ability to demonstrate that they have acted in the best interests of their tracker mortgage customers, with a number of lenders currently undertaking their own internal reviews,” the regulator said.

The Irish Mortgage Holders Organisation welcomed the move.