Per­ma­nent TSB ac­cused of ex­ploit­ing its ‘trapped’ cus­tomers by charg­ing them more

Irish Independent - - News - Char­lie We­ston Per­sonal Fi­nance Editor

PER­MA­NENT TSB chief ex­ec­u­tive Jeremy Mas­d­ing has been ac­cused of ex­ploit­ing ex­ist­ing cus­tomers by charg­ing them some of the high­est vari­able and fixed rates in the mar­ket.

Mean­while, new cus­tomers can get much lower mort­gage rates, the Oireach­tas Fi­nance Com­mit­tee was told.

The com­mit­tee was told

57,000 vari­able rate cus­tomers are pay­ing 4.5pc.

The best fixed rate the bank of­fers ex­ist­ing cus­tomers is

4.2pc, but new cus­tomers can get fixed rates as low as 2.95pc from Per­ma­nent TSB. This means that an ex­ist­ing cus­tomer on a vari­able rate is pay­ing €260 a month more than a new cus­tomer on the 2.95pc fixed rate for a mort­gage of €300,000.

The dif­fer­ence works out at more than €3,000 a year.

Fianna Fáil fi­nance spokesman Michael McGrath told Mr Mas­d­ing: “You are ex­ploit­ing peo­ple’s in­er­tia and the fact that they are trapped.”

He said many of those pay­ing high fixed or vari­able rates were un­able to move banks.

“It is very dis­crim­i­na­tory. You are tak­ing ad­van­tage of peo­ple who are trapped,” he said.

The com­mit­tee was told the bank had supplied it with in­for­ma­tion show­ing that eight mort­gage ac­count hold­ers were pay­ing a fixed rate of 9.1pc.

It is the high­est rate in the State and a legacy from a time when the bank had sky-high fixed rates.

Mr Mas­d­ing said peo­ple on the vari­able rate can ap­ply to get the bank’s lower man­aged vari­able rate (MVR), which is based on the value of the prop­erty rel­a­tive to what is owed on the mort­gage.

How­ever, the 57,000 cus­tomers on vari­able rates had failed to ap­ply.

The MVR is at least 0.2pc cheaper than the vari­able rate,

and lower again for those who a lot of eq­uity built up in their home.

Mr Mas­d­ing de­fended the bank’s rates, de­spite the low-in­ter­est en­vi­ron­ment.

He said the credit risk was higher in Ire­land, reg­u­la­tory risks were higher, liq­uid­ity costs and cap­i­tal costs – or the amount of funds banks have to set aside to due to loans not be­ing re­paid – are all higher.

But he ad­mit­ted that the bank’s blended cost of funds is 0.46pc.

Mr Mas­d­ing said the cur­rent fixed in­ter­est rate of­fers for ex­ist­ing cus­tomers were be­ing re­viewed by the bank.

Jeremy Mas­d­ing de­fended his bank’s in­ter­est rates

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