Explainer - What is the Tracker Mortgage Examination?

A tracker mortgage is a type of home loan where the interest rate charged on the loan tracks that of another publicly available rate, typically the main refinancing operations rate set by the European Central Bank.

In 2015, Central Bank of Ireland decided to carry out an industry-wide review of tracker mortgage accounts. Since 2010, we have been identifying and pursuing some lenders in relation to tracker related issues. These include borrowers who switched from their tracker rate and/or lost their right to revert to a tracker rate when they came to the end of a fixed-rate period on their mortgage. As such, in December 2015 we wrote to all lenders setting out the framework for the Tracker Mortgage Examination.

Scope of the Examination

The Examination requires all lenders to examine the extent to which they have been meeting their contractual obligations to customers. It also includes the transparency of their communications with customers in relation to tracker-related issues. The Examination covers all lenders who may have sold tracker mortgages in the past, including those no longer selling mortgages. It also covers mortgages that have been redeemed or switched to another lender.

Affected customers

When a lender identifies an impacted customer it must firstly:

Stop charging the incorrect rate of interest on the customer's account
Ensure that any further customer detriment is stopped as early as possible
Communicate this to the customer.

Lenders must then carry out a full review of the impacted customer's mortgage account. Once this is complete lenders must issue a detailed letter to the customer explaining:

The exact nature of the error
The correct rate to apply to the customers account
Information on the next steps of the Examination, including the redress and compensation process where applicable.

Timelines

Following extensive and supervisory challenge and assurance work the supervisory phase of the Examination has now closed. As at end-May 2019 c.40, 100 customers have been identified as affected and €683m has been paid by lenders in redress and compensation. However the Central Bank’s work in relation to tracker mortgage related issues is not over. We continue with our ongoing enforcement investigations where we are seeking to determine how and why customer detriment happened.

Further information

The Central Bank has published regular updates on the Examination. We published the Tracker Mortgage Examination: Final Supervisory Report on 16 July 2019 to mark the end of the supervisory phase of the examination. We have also published a list of FAQs on our website for customers who have been, or believe they may have been, affected by this issue.