Central Bank forces BoI to compensate extra 6,000 tracker customers

The Central Bank has forced Bank of Ireland to include an additional 6,000 customers, including 1,800 of its own staff, in its tracker mortgage compensation scheme.

This brings the total number due compensation from the bank to 10,300, more than double the number identified at any other bank embroiled in the scandal.

The industry-wide compensation scheme concerns thousands of customers who were wrongly switched from cheaper “tracker” mortgages to variable rate contracts, in some cases without being informed.

Bank of Ireland confirmed on Thursday it had set aside €200 million to cover the cost of compensation arising from the issue, having originally earmarked just €26 million for impacted customers.

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It also said that an extra 6,000 customers, in addition to the 4,300 already admitted by the bank, including 1,800 of its staff, would now be eligible for redress following an internal review.

‘Robust challenge’

In a separate statement, the Central Bank said the additional customers were only agreed to by Bank of Ireland following a “robust challenge” from the regulator.

“We note the announcement today that, following robust challenge by the Central Bank, Bank of Ireland will now include disputed groups of customers in the tracker examination for redress and compensation,” the Central Bank said.

“ These are groups of customers that the Central Bank had identified as having been impacted but Bank of Ireland had previously disputed. Bank of Ireland will now provide redress and compensation to these customers,” it said.

The compensation being offered to affected customers will include a full reimbursement of the overcharged money plus 10 per cent interest on the original amount. The cost of any financial advice incurred by customers will also be covered.

In its statement, Bank of Ireland said the commencement of the compensation process was a key priority, noting that it would shortly be writing to the initial 4,300 affected customers with an offer of compensation.

Range of options

The bank said the letters would set out the range of options which are open to customers and that the bank aimed to compensate all of these customers, subject to their agreement, by the end of this year.

The bank also signalled it would move 3,700 of the previously identified customers to a lower interest rate than they had previously been offered.

Bank of Ireland chief executive Francesca McDonagh again apologised to impacted customers for the financial loss and anxiety the issue had caused.

“I believe that the way in which we address this issue will define the customer centric culture we aspire to at Bank of Ireland and this is why I have made resolving this issue my personal priority since joining the bank,” she said.

Fianna Fáil’s Michael McGrath described the latest revelation by the bank as “nothing short of staggering”, suggesting all public confidence in the approach of the banks to tracker scandal was now lost.