AIB fined €96.7m over tracker scandal

AIB has been slapped with a record fine for its role in the tracker mortgage scandal.

he bank and its EBS subsidiary have been fined a combined €96.7m, well in excess of the amount the bank had set aside in preparation for the imposition of penalties.

AIB had said it had set aside €70m for a Central Bank fine in previous financial results.

The tracker scandal is the biggest overcharging issue to hit Irish banking.

AIB’s fine is more than double the fine imposed on Ulster Bank for the same tracker issue.

AIB is being sanctioned for denying more than 12,000 customers cheap tracker mortgages at a time when interest rates were rising.

The tracker mess has cost AIB in the order of €600m, including refunds and compensation, legal fees and other administrative expenses, even before the fine.

AIB’s fine was reduced by a third from the potential penalty of  €119m, the Central Bank said. A standard practice where errors are admitted. AIB has admitted to 57 separate regulatory breaches.

The Central Bank’s Director of Enforcement and Anti-Money Laundering, Seána Cunningham said  the fine reflects serious and long running failings by the bank. 

“Our investigation found that when AIB withdrew its tracker mortgage offering there was no proper regard or concern for the impact on its customers. What followed was a litany of failings where customers were wrongly denied their tracker entitlements and others lost their tracker rates due to AIB’s deficiencies in its provision of day to day mortgage services. In respect of many of its failings, AIB had opportunities to act in order to address those failings and prevent further breaches of its customers entitlements – AIB failed to take these opportunities.”

The bank had a culture of failing to properly consider and recognise the rights of its customers and its obligations to them, she said.

Across all lenders some €683m in redress and compensation to 40,100 customers affected by the failings of lenders over the tracker mortgage issue.

These failings included some customers being denied tracker mortgages when they were entitled to them, or put on the incorrect rate.

The AIB and EBS fines are the fourth and fifth to result from the tracker scandal. The Central Bank had already imposed around €82m in tracker fines on four lenders in the past two years.

These include Permanent TSB and its former subprime unit Springboard Mortgages, KBC

Bank of Ireland has yet to be fined for its role in the tracker scandal.

It has set aside €94m of tracker-related provisions at the end of last year, including funds for an expected fine.

The tracker mortgage scandal was first reported on in the ‘Irish Independent’ as far back as October 2009.

At the time the banks denied there was any issue.

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