Ireland’s central bank announced that it has fined a state-backed mortgage lender €21 million for overcharging its customers.
The fine against Permanent TSB, which is 75 percent-owned by the Irish government, is reportedly the biggest regulatory penalty ever imposed on a financial institution in the country. Along with four other Irish banks, Permanent TSB failed to give thousands of home loan customers the lower mortgage charges they were entitled to.
The other institutions involved include Allied Irish Banks, which is 71 percent state-owned; Bank of Ireland, 14 percent state-owned; Ulster Bank, part of RBS; and KBC Ireland, part of the Belgian-headquartered banking group.
The central bank added that there could be additional action against other lenders as it continues to carry out other investigations.
“Where firms fail to protect their customers’ best interests, our response will be robust and the consequences will be serious,” said Seána Cunningham, central bank director of enforcement, according to The Financial Times.
More than 2,000 Permanent TSB customers were victims in the scandal, with 12 customers losing their homes as a result, while 19 investors lost buy-to-let properties. The bank has paid out €54.3 million in redress and compensation to home loan customers.
“I apologize unreservedly to all customers affected by the tracker mortgage issue, and for the distress caused as a result,” said Jeremy Masding, chief executive of Permanent TSB.
In a statement, the Central Bank of Ireland said the bank admitted “in full” a total of 42 separate regulatory breaches. “The investigation has found that PTSB denied its customers a tracker mortgage or did not put them on the correct tracker rate resulting from a number of failings,” it said.
“PTSB failed in their obligations to do the right thing by their customers. In doing so, they broke the trust of their customers and damaged the public’s confidence in PTSB,” Cunningham added.