DUBLIN Dec 20 Ireland's central bank expects
the number of customers overcharged by lenders relating to its
investigation into tracker mortgages to rise significantly to
close to 15,000, Governor Philip Lane said on Tuesday.
The central bank said on Monday that it had identified 8,200
accounts where the right to, or option of a tracker rate and/or
the correct tracker rate was not provided in accordance with
lenders' contractual requirements.
Tracker mortgages, which follow the European Central Bank
rate, were sold in Ireland prior to the financial crisis and
have proven significantly cheaper than variable or fixed rate
mortgages as ECB rates have long been at record lows.
"We do think that number is going to rise, the 8,200 is the
lower bound. We would expect to see a significant increase above
that number," Lane told a parliamentary committee.
Asked it it could reach 15,000, Lane said that might be a
reasonable estimate and the total would not be too far away from
such a level. The central bank expects the 15 lenders involved
to have identified all customers that have been affected by
At 8,200 cases, the total cost of redress and compensation
for lenders would be in the order of 175 to 225 million euros,
Investec Ireland analyst Owen Callan estimated, with risk to the
upside in the event of significant penalties being levied.
The central bank last month fined permanent tsb,
the first lender to start a compensation programme for
customers, 4.5 million euros for errors on its treatment of
"Existing legal provisions or compensation already announced
by the Irish banks on this issue should be more than enough to
cover the cost of this redress programme, and with up to 15
lenders involved in the examination the cost is reasonably well
spread," Callan said, referring to the 8,200 confirmed cases.
(Reporting by Padraic Halpin; Editing by Greg Mahlich)