Bank of Ireland has admitted that it overcharged interest on 3,916 tracker mortgage accounts. 

The bank said "a small rate differential" - on average 0.15% - was discovered as part of its examination of tracker mortgage related issues.

The industry wide review, which is required by the Central Bank, covers such things as transparency of communications with and contractual rights of tracker mortgage customers. 

Bank of Ireland also said it had identified 602 accounts where a right to, or the option of, a tracker rate of interest was not provided to the customer in accordance with their loan documentation. 

In a statement, the bank said it would like to "sincerely apologise" to each of these customers for these failures. 

"The correct rate should have been applied to these accounts and we sincerely apologise for not applying the correct rate in these cases," the bank stated. 

Bank of Ireland said it will now start to contact those affected customers to return them to the correct tracker rate and inform them of their new payment amounts.

It said that as the examination progresses, it will start refunding customers who overpaid interest in the first quarter of 2017.

"In addition, at that point, the bank will have established a redress and compensation scheme in line with the principles set out by the Central Bank including the payment of compensation and independent advice as appropriate and an independent appeals process," the bank added.

The latest discovery from Bank of Ireland comes after a previous review in 2010 led to the restoration of 2,100 customer accounts to tracker rates.

A number of other banks have also admitted to wrongly applying mortgage interest rates, include AIB, Ulster Bank and Permanent TSB.