Public statement relating to Enforcement Action against Allied Irish Banks PLC

• Date: 23 June 2022

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ENFORCEMENT ACTION

Central Bank of Ireland

and

Allied Irish Banks p.l.c.

Allied Irish Banks p.l.c. reprimanded and fined €83,300,000 by the Central Bank of Ireland

for regulatory breaches affecting tracker mortgage customers

On 22 June 2022, the Central Bank of Ireland (the “Central Bank”) reprimanded and fined Allied

Irish Banks p.l.c. (“AIB” or the “Firm”) €83,300,000 pursuant to its Administrative Sanctions

Procedure (“ASP”) for a series of significant and long-running failings in the treatment of its

tracker mortgage customers holding 10,015 mortgage accounts between August 2004 and

March 2022. AIB has admitted to 57 separate regulatory breaches.

The Central Bank determined the appropriate fine to be €119,000,000, which was reduced by

30% to €83,300,000 in accordance with the settlement discount scheme provided for in the

Central Bank’s ASP.

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This will be paid to the Exchequer.

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The fine is separate from the more than €125,000,000 that AIB has been required to pay to date

in redress, compensation and account balance adjustments to impacted customers, including as

part of the Central Bank’s Tracker Mortgage Examination (the “TME”). The TME was established

by the Central Bank as an industry-wide review in 2015 to ensure that lenders were providing

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The Central Bank’s “Outline of the Administrative Sanctions Procedure” provides for an e arly

settlement discount of up to 30% in order to promote early resolution of matters, which in turn leads to

better utilisation of the resources of the Central Bank.

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All fines collected by the Central Bank are returned to the Exchequer.

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tracker customers with their tracker mortgage entitlements and to address any circumstances

in which they were not.

The investigation found that AIB failed in its obligations towards its customers under the Code

of Practice for Credit Institutions 2001 and Consumer Protection Codes 2006 – 2012 (together

the “CPC”). AIB’s failings caused unacceptable harm and loss to those impacted customers over

the course of nearly 18 years. Thousands of customers were overcharged and, at the worst end

of the scale, customers lost 53 properties, 13 of which were family homes. The actions of AIB

had devastating consequences for its customers.

The key findings from the investigation are that AIB:

 Failed to consider the entitlements of customers when it withdrew the tracker mortgage

product: In October 2008, AIB withdrew its tracker mortgage product offering without

adequately considering the best interests of its customers, including their legal entitlements

under the terms of their mortgage agreements.

 Breached customers’ mortgage contracts, delayed in rectifying the breach, and failed to take

immediate and conclusive action to determine for these customers the financial implications

of its wrongdoing: AIB breached customers’ mortgage contracts by failing to offer them the

option of a prevailing tracker rate at the expiry of their fixed rate periods, as they were

contractually required to do (“Prevailing Rate Customers”). AIB failed to re-introduce a

prevailing tracker rate until December 2013, and even then, on a go-forward basis only, by

which time over 6,523 customer contracts had been breached. AIB failed to take immediate and

conclusive action to determine the financial implications of the breach for those customers.

 Wrongfully excluded customers’ mortgage accounts from the TME

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: AIB wrongfully excluded

certain customers’ mortgage accou nts from being considered for redress, compensation and

other safeguards under the Central Bank’s TME, only including these customers in December

2017.

 Failed to handle customer complaints in a fair and consistent manner: AIB implemented an

unfair strategy where AIB treated its customers differently depending on whether they

complained or not about AIB’s failure to offer them a tracker rate. Certain customers were

provided with a tracker rate if they pursued their complaint to the Financial Services and

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5,875 Prevailing Rate Customers who had not previously availed of a tracker rate .