Bank of Ireland fined €100M for ripping off mortgage customers

DUBLIN — Bank of Ireland was hit with an Irish-record €100.5 million fine Thursday for overcharging nearly 16,000 mortgage customers and failing to redress the wrongs for more than a decade.

Bank of Ireland admitted 81 regulatory breaches as part of regulators’ investigation into its refusal to keep providing low-cost “tracker” mortgages to customers, even where contractually obliged to do so.

Like other Irish banks, Bank of Ireland withdrew its tracker products for new customers in 2008 as the nation’s property market collapsed amid the global debt crisis. Irish banks at the time cited their own surging finance costs as justification for withdrawing trackers, which were tied to the rock-bottom rates of the European Central Bank.

But the investigation found that Bank of Ireland — like six other banks previously fined a combined €179 million as part of the regulators’ seven-year probe — often wrongfully withdrew the low-cost products from eligible existing customers, too. Such actions forced 50 customers to lose their properties and inflicted needless hardship on thousands more, it found.

“Our investigation exposed a culture in Bank of Ireland which, when faced with a choice, prioritized its own interests with little to no regard for the impacts on its customers,” said Seána Cunningham, director of enforcement and anti-money laundering at the industry regulator, the Central Bank of Ireland.

She said Bank of Ireland “repeatedly interpreted unclear contractual terms in its own favor and against the customer” and its initial compensation offers “failed to meet the Central Bank’s most basic expectations.” This included an ultimately futile battle to exclude more than 5,000 harmed customers from compensation.

Besides the record fine, the regulators’ scrutiny has obliged Bank of Ireland to pay 15,910 affected mortgage customers more than €186 million in compensation and return many of them to tracker rates.

The bank’s interim chief executive, Gavin Kelly, said the Central Bank judgment “is extremely critical of Bank of Ireland. We understand – and fully accept – why this is. What took place in relation to tracker mortgages was wrong. It should never have happened. We are very sorry that it did.”

Last week, Bank of Ireland became the first Irish bank bailed out by the state following the 2008 debt crisis to exit state ownership fully. Its shares fell sharply Thursday in line with wider market losses.