Ulster Bank fined €37.8 million for “deliberate” customer tracker overcharge

The Central Bank has levied a record €37.8 million fine on Ulster Bank for its use of “deliberate” strategies which caused borrowers to be overcharged on their mortgages during the financial crisis.

The safeguarding authority found that the bank had also only rectified matters for those borrowers that complained. The fine is the largest ever penalty levied against any firm by the Central Bank..

The investigation concluded that customers had been denied their entitlement to a low-cost mortgage linked to the European Central Bank’s main interest rate, the regulator said. Borrowers lost 43 properties as a result of Ulster Bank overcharging on the mortgages, with 29 of those being family homes.

The Central Bank said it had discovered “serious failings” by Ulster Bank in its treatment of 5,940 customers between 2004 to 2020, and that the actions of the bank had caused “avoidable and unacceptable harm”.

The bank “devised and sought to implement a customer campaign to encourage certain tracker customers to convert their tracker rates to fixed rates during 2008, without informing them that they would not be entitled to return to their original tracker rate if they moved to a fixed rate,” the regulator.

“Our investigation identified the numerous opportunities that UBID (Ulster Bank Ireland DAC) had to do right by its customers and the efforts that UBID went to in order to evade its obligations to these customers,” said Seána Cunningham, the Central Bank’s director of enforcement said. “Despite it being clear to UBID from customer complaints that certain customers were paying more for their mortgage than they should be, UBID continued to deny customers the lower tracker rates that they were entitled to.”

Ulster Bank has also paid €128 million in refunds and compensation to 5,940 overcharged mortgage customers. Its chief executive Jane Howard said the bank had learned “serious” lessons from the controversy.  “On behalf of Ulster Bank, I am deeply sorry for the impact that our handling of the tracker mortgage issue has had on our customers and their families,” she said. “We have learned serious lessons and made fundamental changes to the way we work.”

Ulster Bank announced last month that it is exiting the Irish market after more than 160 years,

The Central Bank’s investigations are continuing at AIB and Bank of Ireland.

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