DUBLIN—Ireland’s central bank on Thursday fined NatWest’s Irish business, Ulster Bank, a record 37.8 million euros for overcharging mortgage customers, some of whom lost their homes after being denied their right to a cheaper “tracker” mortgage.
The penalty was almost twice the largest fine previously laid down by the regulator on any institution, a 21 million euro reprimand for permanent tsb in 2019, also for failing to offer customers a mortgage that tracked the European Central Bank rate that has been at or close to zero for almost a decade.
Irish banks have paid out almost 700 million euros ($826.84 million) to compensate 40,000 borrowers denied the mortgage product that was widely offered during the country’s housing boom in the mid 2000s and withdrawn for new customers when the financial crisis hit.
Additional failings that contributed to Ulster Bank’s larger fine included what the central bank said was a deliberate strategy to seek to entice customers to convert their tracker rates to fixed rates during 2008.
The bank also failed to meet a statutory deadline to provide information to the central bank, forcing the regulator to take an “unprecedented step” of starting potential legal proceedings. Ultimately this was unnecessary as the information was provided.
“Our investigation identified the numerous opportunities that UBID [Ulster Bank Ireland DAC] had to do right by its customers and the efforts that UBID went to in order to evade its obligations,” Irish Central Bank Director General, Financial Conduct, Derville Rowland, said in a statement.
“It is unacceptable for any regulated entity to treat its customers in this way.”
Of the 5,940 individual customers impacted by Ulster Bank’s failings, 43 lost their properties as a result being unable to meet their mortgage repayments.
The fine for Ulster Bank, which NatWest announced last month it would wind down after years of under-performance, was reduced from almost 54 million euros in accordance with the central bank’s settlement discount rules.
The central bank launched a probe into the overcharging in 2015 and also fined KBC Bank Ireland 18.3 million euros last year. Other banks remain under investigation.
By Padraic Halpin