Number of homeowners hit by tracker scandal could rise to 50,000

Financial Services Ombudsman Ger Deering. Picture: Patrick Browne

Charlie Weston

The total number of mortgage holders affected by the tracker scandal could be heading for 50,000.

It comes after AIB said that it was putting aside €300m to cover up to 6,000 new tracker cases where the bank had been resisting paying out compensation.

The affected AIB customers could be in line for payouts of about €45,000 each. In October, the Central Bank said the total number of tracker rip-off cases had reached 40,500.

Another 6,000 AIB cases are now likely to be added to this total after the Financial Services and Pensions Ombudsman found against the bank in a preliminary decision.

AIB says its share price opened down 5pc after it said that "the board understands that redress may be due to a previously identified group of customers who had an option of a prevailing tracker rate".

This group of customers had been denied a return to a tracker rate, redress for overpaying interest and compensation when the bank claimed they did not have the option of moving to a tracker rate when they came off a fixed mortgage rate.

However, AIB had offered this group €1,615 for a "service failure" in late 2017.

It said that if they had been given a tracker on the "prevailing rate" back in 2008 it would have been 7.9pc. This is so high it is not regarded as a tracker rate.

This is much higher than the prevailing variable rate at the time, and it is believed Ombudsman Ger Deering found that the rate was far too high.

AIB had withdrawn its tracker mortgage products, which tracked the ECB's base rate, in October 2008 just before the customers emerged from their fixed-rate contracts.

Consumer advocate Brendan Burgess had been fundraising to mount a High Court challenge to force the bank to pay more and restore customers to trackers.

But there are more disputed cases, which could see the overall numbers affected by the tracker scandal near 50,000.

There are another 1,500 disputed cases at Permanent TSB where mortgage holders are arguing they were put on the wrong tracker margin, according to tracker case expert Padraic Kissane.

KBC is disputing 400 cases where it is claiming trackers had been withdrawn by the time people came off fixed rates, and wanted to move to a tracker.

Mr Kissane has produced bank documents showing trackers were still available at a time the bank said they were withdrawn.

Meanwhile, 2,000 Bank of Ireland staff and former staff say they have been denied tracker rates despite internal communications saying they were due the low rates.

Financial adviser Karl Deeter called for staff making decisions for banks to deny people tracker mortgage redress be held to account.

Mr Deeter said: "We are seeing scandal after scandal when it comes to trackers and still no final end in sight. AIB is a State-owned bank.

"Why is the Government not demanding that a few heads roll over this?"

Banks have consistently argued that the tracker issue is completed, especially after the Central Bank issued a final report of its examination of the issue late last year.

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