Hundreds more AIB customers on wrong loan rates

AIB has identified hundreds of more customers as having been put on wrong mortgage rates because of administrative errors while the bank investigated its role in the tracker mortgage scandal.

Chief executive Bernard Byrne told the Oireachtas Finance Committee as well as the 3,200 customers identified as customers wrongly moved off tracker mortgages onto more expensive loans, the bank’s review had found “several hundred” customers put on wrong rates in other types of loans.

Mr Byrne said AIB considered those customers to be a “separate category” to those affected by the tracker mortgage issue, saying compensation would be on the minor scale.

He said the new category “may have been put on the wrong rate for a weekend, for example”, and that they were found while investigating the tracker issue, as opposed to looking specifically for them.

Mr Byrne said 97% of the 3,200 customers had now been dealt with in relation to redress and compensation.

He said the tracker scandal arose not because of a “systemic effort” or a banking industry-organised agreement, but because AIB and other financial institutions had reacted too quickly when the financial crash of 2008 occurred.

“AIB and others reacted (to the financial crash) by suspending trackers very quickly as the ECB rates collapsed. People didn’t think through the consequences, which were that contracts weren’t tracked on systems. I’m not surprised everyone did it at the same time. You had 40 different types of customer and it was a complete failure of the administration system. Everyone had their own challenges and got it wrong,” he said.

Mr Byrne said €133m of €190m set aside by AIB had so far been used in compensation for tracker customers wrongly put on wrong rates.

He said he was “not aware” if gardaí had been in touch with AIB in relation to the tracker mortgage. He said compensation paid out would go as far as rehousing some people who had lost their homes as a result of the scandal.

The Central Bank has said 2m mortgages were originally ordered to be reviewed as part of a probe of 15 lenders that were written to as part of its examination.

AIB has set aside €190m for redress and other costs associated with their reviews. Bank of Ireland has set aside €25m, Permanent TSB €140m, and Ulster Bank €211m.