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Permanent TSB fined 21m euro for tracker mortgage failures

Press Association logo Press Association 30/05/2019 By Michelle Devane, Press Association
a person standing in front of a store window: Permanent TSB has been fined by the Central Bank (Brian Lawless/PA) © Brian Lawless Permanent TSB has been fined by the Central Bank (Brian Lawless/PA)

Permanent TSB has been fined 21 million euro for tracker mortgage breaches. The Central Bank of Ireland reprimanded and fined the bank in respect of “serious failings” to 2,007 tracker mortgage customer accounts between August 2004 and October 2018.

The Central Bank added that PTSB had “admitted in full 42 separate regulatory breaches” of the Code of Practice for Credit Institutions and the Consumer Protection Codes. “This fine is the largest imposed to date by the Central Bank,” a statement from the Central Bank read.

“It reflects the gravity with which the Central Bank views PTSB’s failings and the unacceptable harm PTSB caused to their tracker mortgage customers, from extended periods of significant overcharging to the loss of 12 family homes and 19 buy to let properties.”

To date PTSB has paid 54.3 million euro in redress and compensation to the affected customer accounts. The Central Bank’s director of enforcement and anti-money laundering, Seana Cunningham, said taking out a mortgage is the single most significant financial commitment most people will make in their lifetimes.

“Consumers must have confidence that lenders are acting in their best interests, particularly given the complexity of mortgage documents they need to understand in order to make the best decision,” she said. “Firms must fully adhere to all legal and regulatory obligations, including the Central Bank’s Consumer Protection Codes that we have put in place to ensure that consumers are treated fairly by the firms we regulate.

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“Our investigation found that PTSB failed to put their customers first, with distressing and, in some instances, devastating consequences. PTSB failed in their obligations to do the right thing by their customers. “In doing so, they broke the trust of their customers and damaged the public’s confidence in PTSB.”

At a minimum, she said, customers should be provided with “clear and timely information and warnings about their mortgage”, the highest levels of customer service and a commitment from their lender to put things right promptly and fairly should they go wrong.

“My message today is clear,” she added. “Where firms fail to protect their customers’ best interests, our response will be robust and the consequences will be serious.” In its findings the Central Bank said PTSB had “failed to warn certain customers about the consequences of decisions they might make relating to their mortgage”.

It also found that the bank did not have adequate systems or operational controls in place to enable them to meet their obligations to certain customers. It added that the bank made a decision to “deny certain customers their entitlements to the correct lower tracker rate between 2009 and 2010” unless the customer specifically requested it.

In a statement PTSB said the number of tracker mortgage accounts operated by the bank from 2004 to 2015 was about 110,000. It added that the 2,007 accounts impacted included 279 accounts which were fully remediated by the bank in 2010.

A view of the Permanent TSB cash machines in Dublin City Center.
On Thursday, November 22, 2018, in Dublin, Ireland. (Photo by Artur Widak/NurPhoto via Getty Images) © Getty A view of the Permanent TSB cash machines in Dublin City Center. On Thursday, November 22, 2018, in Dublin, Ireland. (Photo by Artur Widak/NurPhoto via Getty Images) “All of these 2,007 mortgage accounts (bar 12 where the account holders have declined to accept payments) have now been redressed and compensated by Permanent TSB at a cost of circa 54 million euro,” the statement read.

PTSB’s chief executive Jeremy Masding said: “On behalf of Permanent TSB, I apologise unreservedly to all customers affected by the tracker mortgage issue, and for the distress caused as a result.

“Addressing and resolving the tracker mortgage issue for the account holders of the 2,007 impacted accounts has been of the highest priority for the board and management team in Permanent TSB.

“We are confident that we have fully addressed the operational and procedural weaknesses which have been identified in this exercise and, we remain committed to improving our policies and procedures for all customers.”

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