Niall Brady
October 29 2017, 12:01am, The Sunday Times
Business
Hundreds gained in tracker fiasco
Hundreds of households have profited from the tracker mortgage scandal, with banks discovering that they have been systematically undercharging interest over many years but barred from doing anything about it.
While banks have so far had to refund more than €160m to customers who were overcharged, their examination of tracker mortgages has also uncovered wide-scale undercharging. This resulted in customers being given lower tracker margins than specified in their mortgage contracts.
In about 40% of the 13,000 cases identified by banks so far, customers were on the wrong tracker rate.
The Central Bank of Ireland said it was unable to identify how many of these errors had worked in the customers’ favour.
It confirmed, however, that banks would not be allowed return them to the correct tracker margin.
“Customers in this position should not be penalised by lenders in any way,” the Central Bank said.
“In circumstances where the interest rate ... was lower than the appropriate tracker interest rate, the lower of the two rates is to be applied to the customer’s account.”
Permanent TSB said it has discovered in its examination that hundreds of its tracker customers have been undercharged.
“We identified a substantial number of customer accounts where errors had occurred but where the errors turned out to be of benefit to the account holders,” it said.
“In such cases the bank decided to leave the position unchanged rather than to redress the error at the cost of the customer.
“We took the decision early on that if the error was in the account holder’s favour we would not correct the situation as to do so would be to the disadvantage of the account holders.
“We estimate that there was a substantial amount of such cases, certainly several hundred.”
