KBC fined €18.3m for 'serious failings' to tracker mortgage customers

Some customers suffered the most severe impact with 66 properties being lost by customers, 11 of which were family homes
KBC fined €18.3m for 'serious failings' to tracker mortgage customers

The Central Bank said KBC's engagement with their investigation was "deeply unsatisfactory." Picture: Aidan Crawley/Bloomberg

The Central Bank has fined KBC Bank Ireland €18.3m for its serious failings to certain tracker mortgage customers that included the loss of 11 family homes.

In a statement the Central Bank said it has imposed a fine at the highest end of its sanctioning powers, reflecting the gravity with which they view the failures of KBC who held 3,741 tracker mortgage accounts from June 2008 to October 2019. KBC has admitted in full to 12 regulatory breaches.

"The impact of KBC’s failings on its customers, which related to 3,741 accounts, was devastating and included significant overcharging and the loss of 66 properties," the bank said.

Additionally, the Central Bank said KBC’s engagement and co-operation with the Tracker Mortgage Examination (TME) was deeply unsatisfactory. 

KBC caused "avoidable and sustained harm" to impacted customers due to their unwillingness to acknowledge its failings until December 2017 and to take immediate action to apply the protections of the TME. 

"Had KBC adhered to the TME guidelines sooner, without the need for significant and sustained Central Bank intervention, the harm to its customers – particularly incidences of property loss - would have been significantly reduced," the Central Bank added.

The fine is in addition to the €153.5m that KBC has been required to pay to date in redress and compensation to its impacted tracker mortgage customers.

Over the course of 2008, tracker mortgages were becoming increasingly unprofitable for KBC, resulting in the withdrawal of the product by July 2008. The Central Bank’s investigation found that in doing so, KBC failed to treat its existing tracker mortgage customers fairly and put their own financial interests above the protections their customers should have been afforded. 

Of the 66 properties that were lost as a result of KBC’s tracker mortgage failures, 39 of these could have been avoided if the bank had implemented the Stop the Harm Principles immediately and as required. 

"The Firm’s approach to, and implementation of, these protections was grossly inadequate," the Central Bank said.

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