Springboard Mortgages – a former PTSB subprime unit – has been hit with the penalty following an enforcement investigation which found significant breaches of the Consumer Protection Codes 2006 and 2012.

The breaches have been admitted by the firm.

The Central Bank also demanded that the firm implement a major redress and compensation programme to customers affected by the breaches in a bill totalling €5.8 million to date.

The bank found that Springboard – set up by PTSB in 2006 and sold in 2014 to Mars Capital – failed to apply the correct interest rates to 222 customer mortgage accounts over a seven year period between August 2008 and July 2015.

The average amount overcharged to a customer’s account was €19,351. Overcharged amounts ranged from approximately €100 to approximately €68,000.

In doing so, the investigation concluded the firm failed to:

  • Act with due skill, care and diligence and in the best interest of its customers
  • Effectively employ adequate and/or appropriate resources and procedures
  • Have adequate systems and controls in place

It is understood the failures were significant and had serious consequences for affected customers who were forced to make higher mortgage repayments than was necessary.

The failures also plunged some customers into mortgage arrears, while others were subjected to legal proceedings.

The Central Bank’s Director of Enforcement, Derville Rowland, said: “Taking on a mortgage is one of the biggest financial commitments that a customer will make.

“Every mortgage customer must have trust and confidence that their account is being managed properly by the firm providing their loan.

“The Consumer Protection Codes 2006 and 2012 place an obligation on regulated firms to act in the best interests of their customers and to have the proper systems, controls and resources in place at all times to comply fully with their obligations under these codes.”

The bank has since ordered Springboard to cease applying incorrect interest rates to customers’ mortgage accounts and to implement a major customer focused redress and compensation programme.

Rowland added: “The programme was designed to put impacted customers back in the position that they should have been in and to compensate them for the detriment and loss caused to them. The firm has paid approximately €5,800,000 in redress and compensation to date.

“The imposition of the fine and reprimand, in addition to the redress and compensation programme, demonstrates the Central Bank’s determination to take all necessary action in order to protect customers’ best interests, and serves as a clear and timely warning to all regulated firms of their obligations to customers.

“This concludes the Central Bank’s investigation into Springboard Mortgages.”

–  This article originally appeared in Sunday Business Post Online, 29 November 2016