AIB ‘scores own goal’ in tracker rate scandal
AIB has been accused of incompetence and of scoring an own goal after it started adjusting the mortgage balances of thousands of customers caught up in the tracker scandal.
The bank has failed to write to the 6,000 homeowners affected or make a public statement to explain what it isdoing.
Many people who were affected were surprised that AIB has started adjusting their mortgage account without telling them first.
It comes after the bank lost a 10-year battle to avoid paying out to customers who argued they should have had a tracker mortgage.
AIB lost a case with the financial services ombudsman in February and decided not to appeal it, in what was dubbed the prevailing rate cases.
Affected customers had been denied a return to a tracker rate, redress for overpaying interest and compensation.
The bank claimed they did not have the option of moving to a tracker rate when they came off a fixed mortgage rate.
But in April AIB said it would pay the 5,900 customers affected refunds and compensation and write down their mortgages by 12pc, with the money paid in July and August.
It has set aside €300m for the refunds and compensation, but some of that is made up of operational costs.
Consumer advocate Brendan Burgess, who represented the women who took the case to the ombudsman, accused the largely State-owned bank of incompetence. He said it had scored an own goal by not writing to customers explaining what would happen.
The bank said it would compensate customers by refunding them overcharged interest, paying compensation and writing down the value of their mortgages by 12pc from the time they came off the fixed rates. It will repay any interest paid on the difference in capital from that date to now.
That means that, given the balance has been reduced, monthly payments will reduce.
However, it is not restoring them to tracker rates because the Ombudsman’s decision in the case it lost did not tell the bank to do that.