Ulster Bank fined €37.8m over tracker mortgage scandal

Ulster Bank fined €37.8m over tracker mortgage scandal

The bank was issued with the record penalty after it denied borrowers access to the low interest home loans.

The Central Bank of Ireland has fined Ulster Bank almost 37.8 million euro for its role in the country’s tracker mortgage scandal.

The bank was issued with the record penalty after it denied borrowers access to the low interest home loans.

The Central Bank said 5,940 people were denied tracker mortgages, resulting in “significant and widespread overcharging”.

The financial regulator said Ulster Bank failed to provide clear documentation for tracker mortgage customers and that people were denied the ability to make fully informed decisions in relation to their home loans.

It also said Ulster Bank “devised and implemented” a deliberate strategy not to provide certain customers with their correct tracker mortgage entitlement unless they complained.

Some 43 properties were sold by customers, 29 of which were family homes and 13 buy-to-let properties.

Ulster Bank admitted 49 separate regulatory breaches of the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995.

The investigation found that Ulster Bank’s failure to warn certain tracker customers about the consequences of decisions happened at four key stages.

This included prior to drawing down a loan; prior to entering into a fixed rate period; upon seeking to break from a fixed rate period; and upon exiting a fixed period.

The bank, which confirmed it is leaving the Irish market, also “actively sought” to avoid Central Bank intervention due to concerns about its financial exposure if it had to remediate all affected customers.

The Central Bank’s director of enforcement and anti-money laundering, Seana Cunningham, said: “Our investigation identified the numerous opportunities that Ulster Bank had to do right by its customers and the efforts that Ulster Bank went to in order to evade its obligations to these customers.

“Despite it being clear to Ulster Bank from customer complaints that certain customers were paying more for their mortgage than they should be, Ulster Bank continued to deny customers the lower tracker rates that they were entitled to.

“In deciding in 2011 to only return customers who complained to their tracker rates, Ulster Bank calculated the cost of returning all impacted customers to their tracker mortgage rate.

“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.” 

Fine reduced

The bank was to face a fine of €54 million; however this was reduced by 30%.

The Central Bank said the fine reflects the gravity of its findings, after Ulster Bank caused “unacceptable and avoidable harm” to its customers.

Labour Party finance spokesman Ged Nash said: “It is now 12 years since the tracker mortgage scandal first came to public attention, which has now cost the banks close to €1.5 billion.

“However, it is impossible to calculate the harm done to the lives, family relationships and finances of the 40,000 bank customers who were deceived by their lenders and moved off the tracker rates they were entitled to be on.

“We must never forget the victims of this scandal, and especially the 100 families who had their homes wrongly repossessed because of the actions of the banks.

“This damning Central Bank investigation found that Ulster Bank devised and implemented a “deliberate strategy not to provide certain customers with their correct tracker mortgage entitlement unless they complained.

“This speaks volumes about the culture of impunity and misconduct which was at play here.

“And even after they were caught, Ulster Bank dragged its heels in the investigation, by failing to comply with a statutory deadlines for providing information to the Central Bank.”

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