Previously, the bank identified 4,300 customers who were erroneously denied, or switched from the cheaper tracker mortgages to variable rate contracts – in certain cases, without being informed.
From the €26 million originally set aside for compensation, the additional 6,000 customers identified now brings the total cost up to at least €200 million – equivalent to roughly 15% of its pre-tax profits for 2016. And of the newly found 6,000 customers affected, 1,800 are from the BOI’s own staff.
The bank has offered customers an unreserved apology for “the financial loss and anxiety this has caused them and their families.”
“This now gives us a clear picture of the number of impacted customers,” said BoI chief executive Francesca McDonagh, who took up the role in October this year.
“The compensation process is commencing, and our priority is to ensure that all impacted customers are compensated as quickly as possible,” she continued.
“I believe that the way in which we address this issue will define the customer-centric culture we aspire to at Bank of Ireland and this is why I have made resolving this issue my personal priority since joining the bank.”
The bank has also confirmed that the issue is only affecting customers from the Republic of Ireland, and not the UK at large.
A Systemic Scandal
The scandal, however, is not limited to the BOI, as 14 other lenders are under review for overcharging mortgages. In total, around 28,000 customers across a number of banks have been impacted.
The Central Bank of Ireland has been pursuing issues related to tracker mortgages since 2010, but found that a “systemic review” was necessary after issues continued to emerge.
The Central Bank said that it expects all customers identified to have received redress and compensation by the end of 2017.
Currently, compensation schemes for Ulster Bank stand at €175 million, AIB €190 million, and KBC €60 million.