Mortgage Interest Rate Overcharging
Much has been written in the newspapers recently in respect of several overcharging errors by various institutions in Ireland.
The most current financial institutions under scrutiny are Permanent TSB and Springboard. The majority of the impacted accounts (1,152) were accounts of permanent tsb. A further 220 were accounts of Springboard Mortgages Ltd, which is a subsidiary of permanent tsb.
Mortgage Customers have suffered serious consequences including some losing their properties
Impacted customer accounts may have suffered serious consequences as a result of the failures including:
- Having to pay higher mortgage repayments than should have been the case
- Going into arrears that may not otherwise have occurred
- Being engaged in legal proceedings that might not otherwise have been necessary
- In the case of sixty-one of the impacted accounts, customers may have lost ownership of the relevant property linked to the mortgage in situations where they may not have lost these properties if the failures had not occurred.
Details Of Redress + Compensation Programmes for Permanent TSB and Springboard
The Redress and Compensation Programmes for the two institutions differ only in one respect. For impacted customers of permanent tsb, as there is no certainty as to what individual customers might have chosen to do had they been informed fully at the 3 relevant time, permanent tsb will seek their instructions on whether they choose to move now to the tracker interest rate provided for in their mortgage loan conditions, i.e. the rate which they might have moved to, but for permanent tsb’s failures.
The circumstances in which permanent tsb’s failures arose are as follows:
- permanent tsb failed to inform certain customers fully of the consequences of their decisions to break from a fixed rate or discounted tracker rate early. The consequences of breaking early were that customers lost their contractual right to be offered a tracker rate in the future (at the time that their fixed rate or discounted tracker period would have ended); and
- Other customers had a contractual right to be offered a tracker rate at the end of any fixed rate period. However due to a failure by permanent tsb that option was not communicated to them at the end of their fixed rate period.
In the case of Springboard Mortgages Ltd. the failure arose from the application of incorrect interest rates to 220 mortgage accounts.
Springboard has now moved them to the correct rate and is paying the redress and compensation amounts identified.
Source: Permanent TSB and Springboard Statement