Public statement relating to Enforcement Action against the Governor and company of the Bank of Ireland

• Date: 29 September 2022

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ENFORCEMENT ACTION

Central Bank of Ireland

and

The Governor and Company of the Bank of Ireland

The Governor and Company of the Bank of Ireland reprimanded and fined €100,520,000 by

the Central Bank of Ireland for regulatory breaches affecting tracker mortgage customers

On 27 September 2022, the Central Bank of Ireland (the “Central Bank”) reprimanded and fined

The Governor and Company of the Bank of Ireland (“Bank of Ireland”) €100,520,000 pursuant

to its Administrative Sanctions Procedure (“ASP”) for a series of significant and long-running

failings i n respect of 15,910 tracker mortgage customer accounts which were impacted

between August 2004 and June 2022. Bank of Ireland has admitted in full to 81 separate

regulatory breaches.

The Central Bank determined the appropriate fine to be €143,600,000

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, which was reduced by

30% to €100,520,000 in accordance with the settlement discount scheme provided for in the

Central Bank’s ASP.

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This is the largest fine imposed to date by the Central Bank and is in

addition to the more than €186,400,000 Bank of Ireland has already paid to impacted customers

identified prior to and as part of the Central Bank’s Tracker Mortgage Examination (“TME”).

The investigation found that Bank of Ireland failed in its obligations towards its customers under

the European Communities (Unfair Terms in Consumer Contracts) Regulations, 1995, the Code

of Practice for Credit Institutions 2001 and the Consumer Protection Codes 2006 and 2012.

Bank of Ireland’s failures resulted in the loss of 50 properties, including 25 family homes, which

would have been avoided if Bank of Ireland had complied with the most basic and fundamental

of its consumer protection obligations.

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

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The Central Bank’s ‘Outline of the Administrative Sanctions Procedure’ provides for an early 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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The key findings from the investigation are that:

1. Bank of Ireland provided unclear contractual documents to its customers. Bank of

Ireland’s Mortgage Letter of Offer (“MLO”) (used when taking out a mortgage) and

Mortgage Form of A uthorisation (“MFA”) ( used when changi ng the applicable rate) were

unclear and ambiguous regarding customers’ right to a tracker rate after a fixed rate period.

2. Bank of Ireland failed to interpret its unclear contractual documents in customers’ best

interests. Bank of Ireland repeatedly, over a period of over nine years, interpreted these

unclear documents in its own favour and denied customers a tracker rate.

3. Bank of Ireland failed to warn customers about the consequences of decisions relating to

their mortgage. Following its decision to withdraw trackers in October 2008, Bank of

Ireland failed to warn customers that they would lose their tracker mortgage entitlements

if they moved to a fixed rate or if they broke early from a fixed rate period. In addition, Bank

of Ireland failed to warn customers, some of whom were in financial distress, that they would

lose a future tracker mortgage entitlement when signing up to a forbearance arrangement.

4. Bank of Ireland implemented an unfair complaints handling practice in respect of

customers. Bank of Ireland implemented an unfair practice of returning customers with

these unclear MLOs and MFAs to a tracker rate only in the event that they queried and/or

complained about their rate. Other customers with the same unclear mortgage documents

who did not complain were not offered a tracker rate.

5. Bank of Ireland’s deficient mortgage systems and controls, contributed to a significant

number of operational errors. Deficiencies in Bank of Ireland’s mortgage system, combined

with human error in the operation of those systems, resulted in customers being wrongly

put on the incorrect interest rate margin and/or product.

6. Bank of Ireland wrongfully excluded customers from the protections of the TME. Bank of

Ireland wrongfully excluded over 5,000 customers from the TME who had received unclear

documents. These customers were excluded arising from the narrow focus of Bank of

Ireland’s consideration of all matters required under the TME. These failures persisted, until

these customers were finally included in 2017, following significant challenge by the Central

Bank. Additionally, during the conduct of its TME review, Bank of Ireland failed to implement