The Central Bank of Ireland recently reprimanded and fined KBC Bank Ireland plc €18.3 million over its treatment of tracker-mortgage customers between 2008 and 2019

KBC, part of a Belgian-based banking group, had actively pursued its own interests over those of its customers which manifested itself in the bank being proactive in encouraging 3,741 customers to switch mortgage products without highlighting the potential pitfalls. 

This ultimately resulted in 66 properties being repossessed, with 11 families losing their homes.

KBC admitted 12 regulatory breaches including:

  • Pursuing a proactive strategy to convert customers off their tracker rates
  • Failing to adequately warn customers entering interest only or fixed-rate periods that they would be unable to return to their tracker rates
  • Failing to adequately comply with the Central Bank’s Framework for the Tracker Mortgage Examination (TME) 
  • Failure to adequately comply with the ‘Stop the Harm Principles’ of the TME
  • Provided incorrect information to the Financial Regulator 
  • Operational and systems failings

A spokesperson for the Central Bank said:

By overcharging customers over extended periods, KBC forced people into arrears, including certain customers whom KBC knew were already facing financial difficulties

The penalty is the second largest to be imposed to date and is in addition to the €153 million in compensation and balance adjustments paid out. Investigations are ongoing into four other high street lenders. 

As banks count the cost of their misconduct during the last financial crash, one can but hope that history is not being allowed to repeat itself.  

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By Paul Sullivan FRSA

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