AIB accused of misleading customers on mortgages

AIB has been accused of misleading customers who were denied tracker mortgages by writing to them to tell them they would have paid more if they got a tracker rate.

The bank has written to thousands of mortgage holders telling them it saved them money by denying them the low-cost tracker rate. It claimed tracker rates would have become more expensive than variable rates.

This flies in the face of the facts, as tracker rates have been much lower than variable rates for years.

But in a letter sent to around 4,000 customers the bank claimed that it withdrew trackers from October 2008 because they were due to become “prohibitively expensive”.

The issue concerns people who started off their mortgage on fixed rates, at a time when European Central Bank rates started to rise. They should have been offered a tracker rate when the fixed rate ended.

But the bank had withdrawn trackers by the time these people emerged from their fixed rate.

The affected customers have now been sent cheques for €1,615, with €615 of this to cover the cost of taking professional advice.

The AIB letter states: “Any prevailing tracker rate that would have existed at the end of your fixed-rate period would have been more expensive than the variable rates that were available during that time.”

The bank claimed in letters, seen by this publication, that the prevailing tracker rate would have hit 7.9pc.

The implication of the letter was that the customers would have paid more if they got a tracker rate.

Financial adviser Padraic Kissane, who specialises in tracker cases, accused the bank of waffling.

“That is complete waffle. How can the Central Bank allow AIB to send this out?

“There is no way this is true because variable rates never went as high as this prevailing tracker rate AIB is claiming of 7.9pc,” he said.

Mr Kissane said he was getting hundreds of calls from people who received the letters and are confused by the information.

The AIB offers of just €1,600 for the mortgage holders who should have been offered a tracker rate are despite other banks having paid out thousands of euro for similar cases. One couple who were never on a tracker rate, but should have been put on one, received €36,000 in refunds and compensation from AIB.

Asked if it stood over the AIB letter claiming tracker rates could have gone to 7.9pc, the Central Bank said the AIB customers would not be getting any refunds if it had not intervened on the issue.