Ulster Bank has been forced to apologise to more than one thousand customers who are facing a shortfall on their mortgage repayments of up to €30,000 after the bank failed to put them on the correct mortgage repayment schedules for as long as four years.
Affected clients were offered the option of paying interest only on their mortgages for a period but the bank subsequently failed to convert the repayments to both interest and capital at an agreed date.
Ulster Bank said it had identified the cause of the mistake and reported it to the Central Bank. which assured affected customer who experience difficulty meeting any revised repayment schedule “will be treated sympathetically".
Ulster Bank has outlined four options to the deal with the underpayment. It is offering customers an interest free loan which they can use to pay off the under-collected amount.
Alternatively they can extend the term of the mortgage or repay capital and interest over the current term but at a higher rate. The last option the bank is making available is for people to repay the outstanding money in a lump sum.
The chief executive of the Consumers' Association of Ireland Dermott Jewell said the situation "must be remedied without any penalty whatsoever in the guise of associated costs or interest charges being levied upon that borrower".
He said consumers who paid their mortgage every month do so in the minimum amount determined and advised by their lender. "It is not a matter for the borrowing consumer to decide. Therefore the Consumers' Association of Ireland (CAI) would contend that the lender must take responsibility for any and all costs associated with recouping of the primary sum involved both past and future.
Mr Jewell also said that because of the "significant financial shock element here that has the potential to place many in elongated long-term debt, the CAI would advocate for the facilitation of a lengthy term of repayment, if necessary, beyond the term of the mortgage agreement".
Senator Lorraine Higgins criticised Ulster Bank and said that she was most concerned but not surprised by the news that Ulster Bank is yet again causing undue worry and concern to its customers, "through their own mismanagement of mortgage accounts".
She said such customer mistreatment was also evident last June, when over 600,000 customers were affected as a result of a chronic IT collapse. "The lack of customer care was heightened by their subsequent inadequate compensation scheme," she said.
