Brendan Burgess
Founder
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Cash-back mortgages the next big scandal for Bank of Ireland?
Statement by Brendan Burgess, Consumer Advocate on Bank of Ireland tracker fine
What we learned today and why the fine was so big
Bank of Ireland had restored trackers to some customers who had complained but did not restore them to people who had not complained but who had the same terms and conditions.
Bank of Ireland deemed 1650 customers as “not impacted” because they drew down their mortgages before the Consumer Protection Code was launched, even though they had the same terms and conditions as customers who were included but who drew down their mortgages earlier. To make matters worse, Bank of Ireland did not notify the Central Bank of this decision.
Bank of Ireland maintained a stubborn position that their documentation was clear, despite being told by customers, the Financial Ombudsman and the Central Bank that they were not clear.
Bank of Ireland excluded 5,000 customers from the Tracker Mortgage Examination and only included them in 2017 after robust engagement from the Central Bank. In the intervening period, continuing harm was experienced by these customers.
Bank of Ireland’s exploitation extended to its staff who were mortgage customers of Bank of Ireland. They insisted publicly that a staff notice about tracker mortgages was clear, although internally Bank of Ireland acknowledged that the notice was confusing and could be misinterpreted by customers.
Even after identifying customers as impacted or potentially impacted, it did not implement the Central Bank’s Stop the Harm principles and, in some cases, initiated legal action against these customers and in other cases, where these customers sought to switch to another lender, Bank of Ireland did not inform them that they were impacted or potentially impacted.
And furthermore, Bank of Ireland provided inaccurate and inadequate information to the Central Bank on the progress of its Tracker Mortgage Examination.
Cash-back mortgages – the next scandal
This is what the Central Bank said today
Our investigation exposed a culture in Bank of Ireland which, when faced with a choice, prioritised its own interests with little to no regard for the impacts on its customers.
Little has changed. Bank of Ireland has not changed its culture. It has learned nothing from the tracker mortgage scandal except that it can get away with such behaviour for years before being called to account.
Today they are charging existing customers predatory mortgage rates. Their only way of attracting new business is by tricking and confusing customers with cash-back. They are exploiting the ignorance and inertia of their customers. And, of course, some customers cannot switch lenders and, so, are prisoners of Bank of Ireland's predatory rates.
Comparison of AIB and Bank of Ireland mortgage rates for existing customers.
The tracker issues started to emerge in 2008. It took the Central Bank until 2015 to get on top of the issue.
When, eventually, the Central Bank decides that this practice of exploiting the ignorance and inertia of customers, is unacceptable, it will be too late for the people who today are paying mortgage rates of 4.5% to Bank of Ireland.
It is shocking that the Central Bank, the Competition and Consumer Protection Commission and the Government have raised no objections to Bank of Ireland taking over the mortgages of KBC customers.
Brendan Burgess
Statement by Brendan Burgess, Consumer Advocate on Bank of Ireland tracker fine
What we learned today and why the fine was so big
Bank of Ireland had restored trackers to some customers who had complained but did not restore them to people who had not complained but who had the same terms and conditions.
Bank of Ireland deemed 1650 customers as “not impacted” because they drew down their mortgages before the Consumer Protection Code was launched, even though they had the same terms and conditions as customers who were included but who drew down their mortgages earlier. To make matters worse, Bank of Ireland did not notify the Central Bank of this decision.
Bank of Ireland maintained a stubborn position that their documentation was clear, despite being told by customers, the Financial Ombudsman and the Central Bank that they were not clear.
Bank of Ireland excluded 5,000 customers from the Tracker Mortgage Examination and only included them in 2017 after robust engagement from the Central Bank. In the intervening period, continuing harm was experienced by these customers.
Bank of Ireland’s exploitation extended to its staff who were mortgage customers of Bank of Ireland. They insisted publicly that a staff notice about tracker mortgages was clear, although internally Bank of Ireland acknowledged that the notice was confusing and could be misinterpreted by customers.
Even after identifying customers as impacted or potentially impacted, it did not implement the Central Bank’s Stop the Harm principles and, in some cases, initiated legal action against these customers and in other cases, where these customers sought to switch to another lender, Bank of Ireland did not inform them that they were impacted or potentially impacted.
And furthermore, Bank of Ireland provided inaccurate and inadequate information to the Central Bank on the progress of its Tracker Mortgage Examination.
Cash-back mortgages – the next scandal
This is what the Central Bank said today
Our investigation exposed a culture in Bank of Ireland which, when faced with a choice, prioritised its own interests with little to no regard for the impacts on its customers.
Little has changed. Bank of Ireland has not changed its culture. It has learned nothing from the tracker mortgage scandal except that it can get away with such behaviour for years before being called to account.
Today they are charging existing customers predatory mortgage rates. Their only way of attracting new business is by tricking and confusing customers with cash-back. They are exploiting the ignorance and inertia of their customers. And, of course, some customers cannot switch lenders and, so, are prisoners of Bank of Ireland's predatory rates.
| Bank of Ireland | AIB | |
| Variable <90% Loan to Value | 4.5% | 3.15% |
| Variable <80% LTV | 4.5% | 2.95% |
| Variable <60% LTV | 3.9% | 2.75% |
| 5 year fixed | 3% | 2.35% - 2.55% |
| 10 year fixed | 3.5% | 3.1% - 3.3% |
The tracker issues started to emerge in 2008. It took the Central Bank until 2015 to get on top of the issue.
When, eventually, the Central Bank decides that this practice of exploiting the ignorance and inertia of customers, is unacceptable, it will be too late for the people who today are paying mortgage rates of 4.5% to Bank of Ireland.
It is shocking that the Central Bank, the Competition and Consumer Protection Commission and the Government have raised no objections to Bank of Ireland taking over the mortgages of KBC customers.
Brendan Burgess