AIB is set to restore around 3,000 mortgage customers to valuable tracker mortgage rates.
The bank, which includes EBS, is as a first move to write to affected customers and restore them to the lower interest rate product, taking them off variables.
At a later date, these customers are set to qualify for refunds and compensation for overpaying for their mortgages after having trackers wrongfully removed from them.
In financial results released on Thursday morning, AIB chief executive Bernard Byrne admitted the bank was “not sufficiently clear with customers or we failed to honour contractual commitments.”
“On behalf of the bank, I apologise to customers for these failures which should not have happened and which we now intend to put right. We will shortly commence engagement with individual customers affected by this review,” he said.
People who were denied a tracker ended up paying a variable rate, with Irish variables among the most expensive in the eurozone.
Now the AIB and EBS customers are set for a bonanza as they will initially see their repayments fall dramatically and will eventually get refunds for overpaying up to now, as well as being compensated.
The refunds and compensation are likely to run to thousands of euro per customer.
Monthly repayments can be €300 higher for a variable rate, compared with a tracker for the same size of mortgage.
Read more: Most home owners ‘are clueless to how their mortgages work’
The bank is set to write in the coming weeks to AIB and EBS customers who were wrongfully refused a tracker during the downturn.
Many of these people had opted to fix rates when the European Central Bank rate started to rise, expecting to revert back to a tracker at the end of the fixed rate. But they were denied this option.
The bank had initially denied that it had a problem with the wrongful removal of trackers.
But in the past few months, AIB has set aside €102m to cover the cost of the tracker redress. And it has provided another €85m for “other related matters” as part of the tracker review.
Last October, the Central Bank launched an industry-wide review of the wrongful removal of valuable tracker mortgages.
AIB is understood to have 300 staff now pouring over all of its mortgage contracts to work out who is due to have a tracker restored and get compensation, with oversight provided by the consultancy firm KPMG.
Yesterday, the Central Bank said in an update on its industry-wide review that it continued to challenge lenders to ensure progress is being made and fair outcomes achieved for customers. But it said all lenders were co-operating.
The Central Bank has already said it is taking enforcement action against both Permanent TSB and Ulster Bank over their handling of the tracker restoration issue.
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