Ulster Bank hit with record €38m fine over tracker mortgage breaches

Derville Rowland, Director General Financial Conduct, Central Bank of Ireland. PIC COLIN O’RIORDAN

Charlie Weston Twitter Email

March 25 2021 12:00 PM

ULSTER Bank has been fined a record €38m for denying thousands of customers tracker rates.

The Central Bank said 5,940 people were denied trackers, while 43 properties had been sold by customers largely due to the overcharging.

Some 29 of these properties were homes.

The regulator said the bank deliberately devised a scheme to avoid giving people good value trackers when they were entitled to them.

It is the largest fine ever imposed by the Central Bank.

It has emerged regulators had to seek to take High Court action to get the bank to provide it with documents related to the scandal.

The bank, which is in the process of closing down in the Republic, admitted to 49 separate regulatory breaches over its treatment of its mortgage customers.

It has now paid out €128m in interest rate rebates, compensation and put the almost 6,000 customers on to low-priced trackers.

The fine would have been €54m but the bank got a 30pc discount for co-operating with the Central Bank.

It appears no individuals will be held responsible for what happened.

In a damning statement outlining the breaches, the Central Bank said Ulster Bank had devised and implemented a deliberate strategy not to provide some customers with their correct tracker mortgage entitlement.

Only those who complained were given a tracker rate that they were entitled to, the regulators said.

This was done to minimise the cost to the bank of putting people who should have had trackers on the right rate.

Derville Rowland, director general financial conduct, said the fine reflects the gravity with which the Central Bank views Ulster Bank’s failings.

The bank “caused unacceptable and avoidable harm to its impacted tracker customers; from extended periods of significant overcharging to the loss of 43 properties, 29 of which were family homes”.

Central Bank’s director of enforcement and anti-money laundering Seána Cunningham said: “Our investigation identified the numerous opportunities that UBID [Ulster Bank Ireland DAC] had to do right by its customers and the efforts that UBID went to in order to evade its obligations to these customers.”

She said that despite it being clear to the lender from customer complaints that certain customers were paying more for their mortgage than they should be, the bank continued to deny customers the lower tracker rates that they were entitled to.

“Instead, informed by that financial analysis, it decided to take the option that cost it the least and return only customers who complained to their correct rate.”

She said fine should serve as a clear message to the wider market of the importance of compliance with the fundamental requirements of the Central Bank’s Consumer Protection Codes.

The scale of the fine is also a message to take prompt action to address issues comprehensively and fully when they are identified, she added.

One of the issues raised by regulators was the failure of the bank to “stop the harm” and stop denying people trackers once it was clear there was a problem with the bank’s approach.

Failure to act quickly resulted in a number of people who were in arrears engaging in a forced sale of their homes.

One of the issues was that Ulster Bank failed to inform trackers customers who decided to fix they could lose their tracker.

The offences happened between 2004 and April last year.

The €1.5bn tracker industry-wide scandal was first exposed by this newspaper in 2009.

Permanent TSB was fined €21m in 2019. This was a record penalty for a financial institution in this country.

In 2016 PTSB’s former subprime lending unit Springboard was hit with a €4.5m fine.

Last year KBC Bank was fined €18.3m in relation to the tracker mortgage scandal.

The regulator is continuing to carry out enforcement investigations against AIB, EBS and Bank of Ireland.

More than 40,500 borrowers have been affected by the issue, which has resulted in more than €730m being paid in refunds and compensation to date.

The same amount again has been spent by lenders dealing with the refunds, with heavy use of consultants by most lenders to deal with the massive tracker redress process.

Online Editors