Daily Management Review

Record 97 Mln Euros Fine Slapped On Ireland's AIB Over Mortgage Overcharging


Record 97 Mln Euros Fine Slapped On Ireland's AIB Over Mortgage Overcharging
The central bank of Ireland fined AIB and its EBS subsidiary a record 96.7 million euros ($101.6 million) for overcharging clients denied mortgages that track base rates.
The fine was more than double the previous biggest penalty imposed on any institution, bringing the total amount punished to 178 million euros for failing to offer a mortgage that mirrored the European Central Bank rate, which has been at or near zero for nearly a decade.
AIB, which had put aside 70 million euros for a potential penalties by the end of 2021, said it would include an additional penalty in its 2022 accounts. It apologised "unreservedly" for the damage the breaches had on the lives of its consumers.
Irish banks have also paid out approximately 730 million euros to compensate approximately 40,000 borrowers who were rejected the programme, which was widely promoted during the mid-2000s housing bubble but was discontinued for new consumers when the financial crisis hit.
When banks discontinued tracker products for new consumers, they neglected to offer tracker rates to current customers who had contractual rights to a tracker rate in their mortgage agreements.
Of the 12,845 people affected by the failures, 53 AIB customers lost their homes as a result of being unable to make mortgage payments. Despite being a considerably smaller institution, 84 EBS customers lost their possessions.
"The consequences of the prolonged failings were serious and included significant financial strain and distress for those affected and their families," Irish Central Bank Director of Enforcement Seána Cunningham, said in a statement.
Last year, NatWest's Irish unit, Ulster Bank, was fined 37.8 million euros for the same offence, while local lender Permanent TSB and Belgian banking company KBC were fined 21 million euro and 18.3 million euro, respectively.
Springboard Mortgages, a former subprime unit of permanent tsb, was also fined 4.5 million euros after the central bank initiated an investigation into the overcharging in 2015.
Bank of Ireland, the country's largest lender by assets, is still being investigated by the regulator.