AIB admits 1,100 more tracker scandal victims

:: Customers will be refunded average of €6,000 over error

THE AIB banking group has become embroiled in a new tracker scandal involving 1,100 mortgage customers who were overcharged.

It comes in the same week the bank was accused of scoring an own goal after it started adjusting the mortgage accounts of some customers who felt they should have received trackers, but the bank failed to write to them to explain what was happening.

Now the Irish Independent has learned that 1,100 tracker mortgage customers at AIB subsidiaries EBS and Haven have been overcharged for years on their tracker mortgages.

It is understood refunds will average around €6,000 per affected customer. The overcharging goes back to 2006.

A number of extra customers were undercharged but they will not be asked to refund the bank.

People who took out trackers at EBS and Haven were charged the wrong margin over the European Central Bank (ECB) rate.

Trackers are regarded as great value. They track the ECB rate plus a margin, with the margin typically set at 1pc.

The bank started ringing customers yesterday and said it would be writing to them over the next four weeks. The Central Bank has been informed.

The latest debacle takes to 13,300 the total number of customers of the group overcharged in relation to trackers.

The lender was accused of repeatedly making mistakes by consumer advocate Brendan Burgess.

AIB group was heavily criticised in the past few weeks when it was revealed it had imposed a blanket ban on giving mortgages to those receiving State supports during the pandemic. It has since performed a U-turn.

Mr Burgess said: “There is an ongoing tragedy of errors at AIB. This is just the latest example of them completely messing up.

“They should have spotted this and dealt with it properly.”

Earlier this week, AIB was accused of scoring an own goal after it started adjusting mortgage balances of thousands of customers caught up in the tracker scandal.

The bank failed to write to the 6,000 homeowners affected or make a public statement to explain what it is doing.

It came after the bank lost a 10-year battle to avoid paying out to customers who argued they should have had a tracker mortgage, the so-called prevailing rate customers.

AIB is the Republic’s largest mortgage lender and is 71pc owned by the State.

It said: “EBS and Haven are contacting a number of customers to confirm that they are correcting an administrative error relating to their tracker mortgage account. The error arose at the point of drawdown when the customer was placed on a tracker mortgage at the wrong margin. A number of customers were placed on a higher margin and others on a lower margin. Those on the lower margin will continue on this rate while those who were on the higher margin will be put on the correct margin, and receive redress and compensation while the balance on their account will also be corrected.”

EBS has a helpline at 1800 235 461, with the Haven helpline at 1850 565 500.

The Central Bank said in a statement it was aware of an issue with EBS and was engaging with EBS on it.

“Our enforcement investigation of EBS is continuing,” the Central Bank said.

It added that its tracker mortgage probe across all lenders was the most complex and largest consumer protection review it had undertaken, requiring lenders to pay more than €700m in redress and compensation to affected customers.

Some 40,500 mortgage holders have received compensation and interest refunds for being overcharged after being denied a tracker. Most have also been put back on goodvalue tracker rates.

The refunds and compensation have typically amounted to €40,000.

Almost 100 mortgage holders lost their homes because they were denied low-priced trackers.

It has cost lenders around €1.5bn to rectify the mess, with much of this made up of operational costs and the use of consultants.

The scandal was the main reason for the setting up of the Irish Banking Culture Board, although it has yet to be seen to stamp its authority. The scandal has hugely diminished respect for the banks as they have sought to recover from the embarrassment of the €64bn taxpayer bailout.

Last year, Permanent TSB was fined €21m for its failings in relation to the tracker scandal, a record fine for a financial institution.

Much larger fines are now expected to be levied on AIB, Bank of Ireland, Ulster Bank and KBC.