AIB may fight tracker appeals
AIB has refused to rule out mounting High Court legal challenges against any successful appeal by customers over tracker mortgage redress entitlements.
There are 117 appeals regarding AIB tracker cases before the Financial Services Ombudsman, from people who are unhappy with the terms of their compensation offers and others who feel unfairly excluded from the redress scheme.
Asked by Sinn Féin’s Pearse Doherty at the Joint Oireachtas Finance Committee if he could guarantee the bank will not challenge any successful appeal by customers, AIB chief executive Bernard Byrne said: “I can’t give that guarantee as I don’t know the circumstances of each case.”
AIB has been dealing with nearly 10,000 cases and has put aside €230 mtoc over compensation. The overall tracker scandal — which saw borrowers of all the main lenders wrongly removed from tracker loans and put on more expensive mortgages — is expected to grow to 40,000 cases and €1bn in costs when dealt with.
AIB also said the 500 additional tracker cases that have come to light at its EBS subsidiary will be fully back on proper rates by the end of June and compensated by the end of September. Mr Byrne said AIB only recognised these cases as being worthy of the tracker investigation after being pressured by the Central Bank.
Mr Byrne told the Finance Committee that AIB has not set aside provisions to cover potential fines and penalties that could be handed out by the Central Bank. He said AIB remains “ready and open” to address any other cases should they emerge.
AIB has refused to rule out mounting legal challenges against any successful appeal by customers over their tracker mortgage redress entitlements.
Currently, some 117 appeals regarding AIB tracker cases are before the Financial Services Ombudsman. These comprise a mix of customers who feel they should be on trackers but were not included on the redress scheme, and others who are unhappy with the terms of their compensation offers.
When asked by Sinn Féin finance spokesperson Pearse Doherty, at yesterday’s sitting of the Joint Oireachtas Finance Committee, if he could guarantee AIB would not challenge any successful appeal by customers, the bank’s chief executive Bernard Byrne said: “I can’t give that guarantee as I don’t know the circumstances of each case.”
Mr Doherty called his response “disappointing” and asked whether AIB was guilty of being too legalistic as opposed to customer-focused when determining tracker redress entitlements.
To that, Mr Byrne replied that the issue “is not as binary as that”.
One mortgage rights campaigner suggested, after the meeting, that it is perfectly understandable for AIB to examine appeals and said it is legally entitled to challenge any ruling, which it views as wrong, to the High Court. They added that AIB would be seen as being more customer-orientated than some other banks.
To date, across AIB, Bank of Ireland, Permanent TSB, Ulster Bank, and KBC Ireland, over 37,000 cases of people being wrongfully removed from tracker mortgages and placed on more expensive loans have come to the fore. By the end of the Central Bank’s investigation into the scandal, it is estimated that over 40,000 cases will have been identified at a cost of over €1bn in redress.
AIB, itself, is dealing with close to 10,000 cases and the bank recently increased its provisions to cover redress from €190m to €230m.
However, Mr Byrne told the committee that AIB has not, unlike some other banks, set aside any provisions to cover potential fines and penalties that could be handed out by the Central Bank for its role in the tracker scandal.
He also admitted that the additional 500 tracker cases that have recently come to light at AIB’s subsidiary EBS were deemed worthy of redress only after the Central Bank pressurised the bank on the matter.
Mr Byrne said the outstanding EBS customers will have their rates rectified by the end of this month and be compensated by the end of September. He added he was confident this would draw a line under the matter for EBS, but said the group remains “ready and open” to address any other cases should they emerge.
“From AIB’s perspective, all impacted customers across more than 30 individual groupings have been identified, contacted, and restored to their correct interest rates and paid redress and compensation,” he said.
“We are well-progressed and are in the final stages of the Central Bank’s tracker mortgage examination. But, ultimately, the Central Bank is the arbiter in deciding when the matter is complete.”
Asked about the current culture within AIB, against the backdrop of the Central Bank’s ongoing ‘culture and behaviour’ examination of all Irish lenders, Mr Byrne said the group has made a lot of progress but is “still on a journey of change”.
“I’m not saying we’re done, but I’m comfortable we’re on the right path and are doing the right things.”
Mr Byrne said while the tracker scandal has overshadowed progress, “normalisation” is returning to the banking system.