Bank of Ireland says it overcharged 3,916 tracker mortgage customers

It is contacting affected policy holders and will offer compensation in the new year...

Bank of Ireland says it overcharged 3,916 tracker mortgage customers

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Bank of Ireland has identified 3,916 accounts which have been overcharged as part of its review of its tracker mortgage policies which covers, among other things, transparency of communications with and contractual rights of tracker mortgage customers.

This is an industry-wide review initiated by the Central Bank.

It says that it charged "a small rate differential, of on average 0.15%, on 3,916 accounts currently on a tracker rate of interest which is not the rate specified in the account loan documentation."

The bank also found that there were 602 accounts where the option of a tracker rate was not provided to the customer when it should have been.

These tracker-policies have offered savings in recent years. These policies' rates are set at a fixed percentage or 'margin' above the ECB rate. As its rates plummeted during the financial crisis Irish customers' charges should have dropped to close to 1%.

"The Bank of Ireland Group would like to sincerely apologies to each of these customers for these failures. The correct rate should have been applied to these accounts and we sincerely apologise for not applying the correct rate in these cases," BOI said in a statement.

BOI will contact overcharged customers early in the new year.

"In addition, at that point, the bank will have established a redress and compensation scheme in line with the principles set out by the Central Bank including the payment of compensation and independent advice as appropriate and an independent appeals process," the bank added.

After a previous examination in 2010 the bank restored tracker rates for 2,100 accounts.

AIB, Ulster Bank and Permanent TSB are dealing with similar issues and reviewing their tracker policies.