More than 8,000 Irish borrowers were overcharged by financial institutions in the tracker mortgage scandal, according to the Central Bank.
The regulator’s update on its investigation into customers being overcharged for loans or moved to more expensive standard variable rates put the total number of those known to have been affected at 8,200.
The official figure provided by the Central Bank is lower than the combined estimates provided by the country’s main lenders. Figures supplied to the Oireachtas finance committee by Bank of Ireland, AIB, Ulster Bank and Permanent TSB suggested that the total number of affected borrowers was between 10,000 and 11,000. The Central Bank declined to explain why its figure was lower.
Lenders also said that at least 87 borrowers had lost their home. The Central Bank said that 15 financial services companies were involved in the inquiry, which requires lenders to conduct internal investigations under the supervision of the regulator.
Bernard Sheridan, the head of consumer protection at the Central Bank, said that more borrowers were being moved back to the correct interest rate set out in their mortgage contract.
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“Given the size and complexity of the tracker examination, it will take time to complete,” he said. “Based on current progress, we expect that relevant lenders will have identified and commenced engagement with impacted customers by mid-2017 with payment of redress and compensation, processing and consideration of any appeals and the Central Bank’s own assurance work continuing beyond this point for some lenders.”
Addressing the finance committee this month, Mr Sheridan called lenders’ mismanagement of tracker loans a scandal.
When groups of affected customers are identified the lender must stop charging the incorrect rate of interest. The lender will then issue a letter to the customer explaining the nature of the error, the correct rate to apply to the customer’s account and information on the next steps in the tracker examination, including the redress and compensation process.
Other lenders involved in the Central Bank review include KBC Ireland, Danske Bank, Pepper Asset Servicing and Start Mortgages.
The Central Bank has been accused of responding slowly to consumer concerns.
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Last week Pearse Doherty, the Sinn Fein finance spokesman, said that it “sat on its hands” for years before launching an inquiry last December.
The Central Bank has rejected criticism that it was slow to look into banks and said that its supervision of lenders had been “intrusive”.
Philip Lane, governor of the Bank, is due before the Oireachtas finance committee to discuss the Bank’s response to the tracker scandal this morning.