Permanent TSB has been fined €21m by the Central Bank in respect of "serious failings" which affected 2,007 of its tracker mortgage customer accounts.

The fine is the biggest ever imposed by the Central Bank under its sanctions procedure. 

The Central Bank said the lender's failure to put its customers first resulted in "distressing and in some instances devastating consequences" for some of its tracker mortgage customers.

It said it found "serious failings" by Permanent TSB which affected over 2,000 of its tracker mortgage customers between August 2004 and October 2018.

Permanent TSB has admitted to 42 separate regulatory breaches of the Code of Practice for Credit Institutions and the Consumer Projection codes.

The Central Bank said this marks the conclusion of the first in a series of ongoing investigations rising from its tracker mortgage examination.

It said the size of the fine reflects the "gravity" with which it views Permanent TSB's failings and the "unacceptable harm" the bank caused some of its tracker mortgage customers. 

This included extended periods of overcharging as well as the loss of 12 family homes and 19 buy-to-let apartments. 

As well as the Central Bank's fine and reprimand, Permanent TSB has also had to pay €54.3m in redress and compensation to its impacted customers. 

The Central Bank said its investigation found that PTSB denied its customers a tracker mortgage or did not put them on the correct tracker rate due to a number of failings.

These included the failure to warn customers about the consequences of decisions they might make relating to their mortgage, operational and system failings and incorrect legal interpretation of contractual terms and conditions. 

Permanent TSB's fine was reduced from €30m to €21m in accordance with the settlement discount scheme provided in the Central Bank's sanctions procedure. 

The Central Bank's Director of Enforcement and Anti-Money Laundering, Seána Cunningham, said that taking out a mortgage is the single most significant financial commitment most people will make in their lifetimes. 

"Consumers must have confidence that lenders are acting in their best interests, particularly given the complexity of mortgage documents they need to understand in order to make the best decision," Ms Cunningham said.

"Our investigation found that PTSB failed to put their customers first, with distressing and, in some instances, devastating consequences. PTSB failed in their obligations to do the right thing by their customers," she said. 

"In doing so, they broke the trust of their customers and damaged the public's confidence in PTSB," Ms Cunningham added.

She said that at a minimum, customers should be provided with clear and timely information and warnings about their mortgage, the highest levels of customer service and a commitment from their lender to put things right promptly and fairly should they go wrong.

Outlining the reasons for today's enforcement action, the Central Bank said that Permanent TSB failed to to warn certain customers about the consequences of decisions they might make relating to their mortgage.

Derville Rowland who is Director General of Financial Conduct at The Central Bank of Ireland said: "It's really important that we call out the level of dissatisfaction that we all have with the level of conduct in the tracker mortgage case."

Ms Rowland also said that the Central Bank needs to "send a signal to PTSB and to all of the lenders, that this, will not be tolerated by the customers in Ireland, or by the regulator, and that we expect them all to deliver far better for their customers in the future."

PTSB also did not warn certain customers that they would lose their tracker mortgage entitlements as a consequence of their request to break early from a fixed or discounted interest rate.

It also found that PTSB did not have adequate systems and/or operational controls in place to enable them to meet their contractual and regulatory obligations to certain customers. 

This included over-reliance on manual intervention and a lack of clarity at that time in relation to who was responsible for mortgage products within the bank.

The Central Bank also said that PTSB made a decision to deny certain customers their entitlements to the correct lower tracker rate between 2009 and 2010 unless the customer specifically requested it, or queried or complained. 

It also said that PTSB denied certain customers their enduring contractual right to a tracker mortgage as a result of the lender's incorrect interpretation of the extent of certain customers' contractual entitlements.

Jeremy Masding, Permanent TSB's CEO

Jeremy Masding, the chief executive of Permanent TSB, said that he apologises unreservedly to all customers affected by the Tracker Mortgage issue, and for the distress caused as a result.

"Addressing and resolving the Tracker Mortgage issue for the account holders of the 2,007 impacted accounts has been of the highest priority for the board and management team in Permanent TSB," Mr Masding said in a statement.

"We are confident that we have fully addressed the operational and procedural weaknesses which have been identified in this exercise and, we remain committed to improving our policies and procedures for all customers," he added.

In today's statement, Permanent TSB said the number of tracker mortgage accounts operated by it from 2004 to 2015 was about 110,000. 

The bank said the figure of 2,007 impacted accounts includes 279 accounts which were fully remediated by Permanent TSB in 2010. 

"All of these 2,007 mortgage accounts (bar 12 where the account holders have declined to accept payments) have now been redressed and compensated by Permanent TSB at a cost of about €54m," it said.

Based on the latest published Central Bank of Ireland figures, it also said the affected accounts identified in the PTSB investigation account for about 5% of the industry total impacted by the Enforcement Investigations.

Approximately 40,000 customers of the country's main banks were impacted by the tracker mortgage issue and the banks had paid a total of €647m in redress by the end of 2018.