17 10 2022 Insights Regulatory

Recent fines issued by the CBI

Reading time: 2 mins


On 29 September 2022, the Central Bank of Ireland (the “Central Bank”) handed down their largest fine to date to Bank of Ireland over its handling of its tracker mortgage customers. The latest fine marks in the latest in a string of substantial fines imposed on financial institutions by a Central Bank intent on showing its enforcement teeth, absent from the pre-financial crash framework. Below, we summarise each of the fines handed out.

1. Allied Irish Banks P.L.C fined €83,300,000 for regulatory breaches affecting tracker mortgage customers.

On 22 June 2022, the Central Bank fined Allied Irish Banks P.L.C (“AIB”) for 57 separate breaches relating to a series of “significant and long running” failings in the treatment of its tracker mortgage holding customers. An estimated 10,015 mortgage accounts were affected between August 2003 and March 2022.

AIB were issued with a fine of €83,300,000 as a result of an investigation which found AIB to have failed in its obligations towards its customers under the Consumer Protection Codes 2006-2012, causing harm and loss to those impacted. The consequences of AIB’s prolonged failings were serious and included significant financial strain and distress for those affected and their families, the worst of whom lost 53 properties, including 13 family homes.

2. Danske Bank A/S fined €1,820,000 for transaction monitoring failures in respect of anti-money laundering and terrorist financing systems.

On 13 September 2022, the Central Bank fined Danske Bank (Danske) for three breaches of the State’s money laundering and terrorist financing laws. Danske was issued with a €1.82 million fine for breaches stemming from a failure to ensure that its automated transaction monitoring system monitored the transactions of categories of Irish customers for a period of almost nine years between 2010 and 2019. It is estimated that between this period, almost 350,000 transactions processed through the Irish branch were not monitored effectively.

This is the first penalty the Central Bank has imposed on a financial institution which is incorporated and supervised outside of Ireland and highlights the requirements of firms operating on a branch basis inside of Ireland to ensure their systems for reporting are compatible with the Irish legal requirements.

3. Bank of Ireland fined record €100.5m for regulatory breaches that affected tracker-mortgage customers.

On 29 September 2022, the Central Bank handed down their largest fine to date to Bank of Ireland over its handling of its tracker mortgage customers. The Central Bank found 81 separate regulatory breaches which had affected nearly 16,000 tracker-mortgages accounts between August 2004 and June 2022 resulting in the loss of 50 properties, including 25 family homes.

Bank of Ireland have been reprimanded for what has been described as a failure to meet “the most basic expectations” for its customers over an extended period of time. This fine represents the fifth imposed on a bank for regulatory breaches associated with the long-running CBI Tracker Mortgage Investigation.

With many fixed rate mortgage terms coming to an end in a period of increasing interest rate environment, financial institutions will no doubt be required to invest further to ensure that instances of overcharging are avoided in future.

AUTHOR: Michael Quinlan, Partner | Jack Bergin

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