The Central Bank has reprimanded Bank of Ireland and fined it a record €100.5 million for regulatory breaches that affected tracker-mortgage customers.

The regulator said that the fine was imposed for a series of “significant and long-running failings” that had affected almost 16,000 tracker-mortgage accounts between August 2004 and June 2022.

Bank of Ireland has admitted in full to 81 separate regulatory breaches.

The Central Bank imposed a fine of €143.6 million, but this was reduced by 30%, in line with a settlement-discount scheme provided for in the regulator’s sanctions procedure.

50 properties lost

Bank of Ireland has already paid out more than €186.4 million to customers affected by the issues identified before and during the Central Bank’s investigation of how tracker-mortgage customers were treated by the banks.

The investigation found that Bank of Ireland had failed in its obligations towards its customers under the European Communities (Unfair Terms in Consumer Contracts) Regulations 1995, the Code of Practice for Credit Institutions 2001, and the Consumer Protection Codes of 2006 and 2012.

“Bank of Ireland’s failures resulted in the loss of 50 properties  including 25 family homes, which would have been avoided if Bank of Ireland had complied with the most basic and fundamental of its consumer-protection obligations,” the Central Bank said in a statement.

The main findings from the Central Bank probe were:

• Bank of Ireland provided unclear contractual documents to its tracker customers,
• Bank of Ireland failed to interpret its unclear contractual documents in customers’ best interests,
• The bank failed to warn customers about the consequences of decisions relating to their mortgage,
• The bank implemented an unfair complaints-handling practice for customers, returning them to a tracker rate only when they queried or complained about their mortgage rate,
• “Deficient” mortgage systems and controls contributed to a significant number of operational errors,
• The bank wrongfully excluded customers from the protections of the Central Bank’s examination of tracker mortgages, including them only after “significant challenge” by the regulator.

‘Missed opportunities’

Seána Cunningham (Director of Enforcement and Anti-Money Laundering) said that Bank of Ireland had failed to meet the “most basic expectations” for almost 16,000 of its customers over an extended period of time.

“The failings resulted in significant and, at times, devastating detriment for many of those customers,” she added.

Cunningham said that the investigation had exposed a culture in Bank of Ireland that, when faced with a choice, “prioritised its own interests, with little to no regard for the impacts on its customers”.

She referred to a series of “missed opportunities”, during which Bank of Ireland “could have done the right thing” by its tracker-mortgage customers.

BoI apologises

“Furthermore, Bank of Ireland’s initial redress and compensation proposals under the TME [tracker-mortgage examination] failed to meet the Central Bank’s most basic expectations, as a result of which significant Central Bank intervention was again required,” Cunningham stated.

“If a firm has the right culture, the Central Bank’s role should not – as was required here – extend to prolonged engagement to ensure fair outcomes for consumers.

“We expect firms to promptly make things right when things go wrong,” said Cunningham.

Bank of Ireland has apologised to customers for what it described as a "wide range" of failures on tracker mortgages.

"We unreservedly apologise to all customers harmed by the tracker-mortgage issue," said Gavin Kelly (interim chief executive).

"The impacts were significant and wide-reaching, up to and including loss of homes in the most serious of cases.

"Banking is based on trust, but our failures damaged that trust," he added.
Kelly said the that bank had learned "hard lessons", and had taken steps to ensure a more "customer-focused bank".