Brendan Burgess

How many customers were affected?

What happened to these customers?
There were 4 cohorts
Cohort A - 1,130customers
These customers were entitled to tracker mortgages on expiry of their fixed rate term. But they broke out of their fixed rate early, and ptsb claimed that this meant that they gave up their right to a tracker.

The Central Bank said that because they did not advise the customer when they broke out of their fixed rate early that this meant that they would lose their tracker, they were in breach of the Consumer Protection Code requirement to fully inform customers

Cohort B - 565 customers
ptsb just made plenty of errors through having bad systems. They put people on the wrong rate. They didn't give people trackers they were due. Just the ordinary mistakes which banks make. [And contrary to public opinion, there were also hundreds of customers who were put on a lower rate than they should have been, but these customers were not asked to pay back the "undercharge"]

Cohort C - 279 customers [Sorted in 2010 before the current Tracker Mortgage Enquiry]
There customers had a rate specified in their mortgage contract. But they later fixed their mortgage rate. When the fixed rate ended, they were put on a higher tracker rate. ptsb conceded back in 2009 that this was ambiguous. And when customers complained, they were given the lower rate. But ptsb should have given this rate to all affected customers whether they complained or not.

Cohort D 33 Customers
At the end of a fixed rate period, customers were offered a choice of fixed, variable or tracker. Many chose the variable rate or another fixed rate. ptsb claimed that this meant that they gave up their right to a tracker in the future.

But the contract said: "At the end of any fixed rate period , you will be offered a tracker". But if they later fixed, ptsb refused them a tracker. This was wrong.

Are there other customers still arguing their case?
Yes, there are two main cohorts of customers who are not happy with the rate they were on.

Cohort E - Prevailing Rate customers
These borrowers were told that at the end of their fixed rate, they would be offered a tracker mortgage at the "then prevailing rate". ptsb charged rates of between 1.8% and 3.25%. These customers are arguing that these rates are too high.

Cohort F - Discounted tracker customers
This group of customers took out a mortgage called a "discounted tracker" where they received a discount of 0.2% for the first year and were charged a margin of 0.6%. They assumed that the rate they would be charged on expiry of the first year would be 0.8%, but they were offered the then prevailing rate of up to 3.25%

The Central Bank has concluded its investigation with ptsb so if these customers want to take their cases further, they must now go to the Financial Services Ombudsman or the High Court.

Why was no individual fined? Why did no heads roll?
I asked the Central Bank yesterday if there are any sanctions investigations against current or former employees of ptsb ongoing. They said that they could not comment.

So we just don't know.

It's much easier for the Central Bank to impose a sanction on a bank than on an individual. It is always in the bank's interest to agree to the sanction and fine and draw a line in the sand. Individuals like Michael Fingleton have no incentive to agree to a fine and can run rings around the Central Bank when they try to personally sanction them.
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Brendan Burgess

How much was paid in redress and compensation to ptsb customers?
€54.3 million to 2,007 customers or €27,000 each.

Customers got a refund of the interest overcharged plus an automatic 10% of the interest overcharged as compensation.

They could also apply for further compensation if they felt that 10% did not adequately compensate them for the distress.

Where will the €21m fine go?
The €21m fine will go to the Central Bank. It will form part of their profits. And it will end up being paid as a dividend to the Exchequer.

Michael McGrath has suggested: "‘There are many outstanding tracker cases that remain unresolved. Some of them are in what might be described as ‘a grey area’ given the ambiguity in the mortgage documentation. I would like to see the Minister for Finance and the Central Bank explore the option of using the revenue from the tracker fines to establish a fund to support the customers in category. "

Who will pay the fine?
At the end of the day, ptsb will simply pass this on to their other customers in terms of higher mortgage rates and increased banking charges.

So the customers of ptsb will end up paying €21m to the Exchequer.

But doesn't the state own 75% of ptsb?
Yes, it does. So if the fine is not passed on to the customers, it will be just circular fine.

ptsb pays the fine to its own shareholders.

Is ptsb worse than the other banks?
In some ways yes, but in other ways no.

First of all, the reason this was such an issue for ptsb is that they jacked up the Standard Variable Rate to an extortionate level, so not only were people losing cheap trackers, they were paying by far the highest mortgage rates in the market. At one stage, ptsb was charging 6% while AIB and BoI were charging 3%. So the loss of the trackers did far more damage to ptsb customers than to AIB customers, for example.

But because of this, ptsb customers were quicker to complain to the Ombudsman and as a result, ptsb sorted out their problem much quicker than any of the other banks.

ptsb has only 2,007 customers affected by this. The total for the other 4 banks is 38,000 or an average of over 9,000 each!
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Frequent Poster
My guess is that the "real" number of affected PTSB customers is likely to be closer to 9000 than the 2000 they say, except the trickery they engaged in in the contracts has given them some protection. They will have to concede eventually as they blatantly flaunted consumer protection.

Brendan Burgess

My guess is that the "real" number of affected PTSB customers is likely to be closer to 9000
Hi Stitcher

Is that a guess or is it based on any evidence?

There is only a handful of people on Askaboutmoney who fall into the same category as you - "discounted tracker". I would have thought that there might be only a few hundred of those. But my guess is as bad as yours. I have no real evidence except the lack of complaints.

There were thousands of others who had a fixed rate and kept it until maturity. On maturity, they were offered the then prevailing tracker rate and most of them probably opted for a lower SVR or fixed rate instead. I have not seen any of these people complaining that the prevailing rate should have been lower. At least ptsb offered them the option of a tracker - AIB had the same wording but did not offer them a tracker. There are 6,000 in this AIB cohort. Given that AIB was at least twice as large as ptsb, I would imagine that there were at most 3,000 in this category but, as I have said, I have not seen any of them complaining.

Some of the people who broke early and were put on 3.25% are complaining about that rate, but they are in the 1,007 Cohort 1 already.

So really the only cohort which would increase the numbers is the prevailing rate cohort - I would guess 300, but maximum 1,000.