AIB may fight tracker ap­peals

Irish Examiner - - Front Page - Ge­off Per­ci­val

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.

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