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Permanent TSB admits wrongdoing on 1,372 mortgage accounts

Published 28/07/2015

Permanent TSB chief executive Jeremy Masding apologised for the serious consequences of the bank's failings
Permanent TSB chief executive Jeremy Masding apologised for the serious consequences of the bank's failings

Serious failures by Permanent TSB, one of Ireland's major banks, has led to people losing their homes, a damning investigation has revealed.

Permanent TSB, which was bailed out by taxpayers, has admitted "deeply regrettable" overcharging and wrongdoing on nearly 1,380 mortgage accounts.

It has set up a "major" redress and compensation scheme for its customers who were forced off their tracker loans to more expensive home loans.

The lender has admitted its wrongdoing led to customers paying higher repayments, being plunged into arrears, hit with costly legal fights and in dozens of cases, actually losing their house.

Alan Cook, chairman of Permanent TSB, and Jeremy Masding, chief executive, said they "apologise unreservedly" for the very serious consequences of the bank's failings.

"We are truly sorry that this has occurred and our absolute focus now is on correcting the position of every impacted customer as speedily as possible," they said in a joint statement.

On the 61 people who lost their houses, in some cases their homes, they added: "We will do everything in our power to help these customers."

The mess-up came to light after an investigation by the Central Bank of Ireland, which ordered a redress and compensation scheme for impacted customers.

Permanent TSB is to write to those customers, and those of its subsidiary Springboard Mortgages Limited who were also affected, over the next two weeks.

Some 1,372 mortgage holders are involved.

Derville Rowland, the Central Bank's director of enforcement, branded the failures "very serious and their consequences to be completely unacceptable".

"Our first priority has been to address the customer detriment by requiring Permanent TSB to put in place a customer focussed redress and compensation programme," she said.

"To avail of the Mortgage Redress Programme, customers will have to engage with Permanent TSB and respond to the letter which they will receive.

"We encourage impacted customers to consider their letter of offer and options carefully.

"We also encourage customers to use the money provided by Permanent TSB or Springboard to obtain independent advice."

Permanent TSB admitted it did not tell customers they had a right to take on cheaper tracker rate mortgages, or that by changing their home loan arrangements they barred themselves from the cheaper rates.

In 220 cases, by subsidiary Springboard Mortgages, the wrong interest rate was applied.

The lender has been forced to repay the sums owed to customers as well as compensation.

Where someone lost their home because of the blunder they will be paid 50,000 euro, or 25,000 euro if they lost an investment property.

Michael McGrath, Fianna Fail finance spokesman, said the overcharging was indicative of a "shocking culture in Irish banks" where the interests of customers rank very low.

"The actions of Permanent TSB were appalling in this case," he said.

"They essentially adopted a steamroller approach in which they used every possible tactic right up to taking the case to the Supreme Court in order to deny customers the rights to which they were entitled."

Pearse Doherty, Sinn Fein's finance spokesman, accused the Finance Minister Michael Noonan of sitting on his hands while people lost their homes.

"Minister Michael Noonan was the sole shareholder in Permanent TSB for the duration of this scandal yet for years under his watch, this State owned bank ripped off hundreds of customers and even after being exposed fought to the bitter end to delay redress," he added.

"We have to remember that the bank went to great lengths to avoid moving their customers back onto tracker rate mortgages including refusing mediation and appealing every decision made against it in the courts."

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