KBC Bank fined 18.3 million euros by Central Bank for follow-up mortgage scandal

THE CENTRAL BANK has fined KBC Bank Ireland € 18.3 million for regulatory violations related to the tracker’s mortgage scandal.

This fine is in addition to the 153,524,363 euros that the Belgian-owned bank has had to pay to date for reparations and compensation.

In a statement, the central bank said the fine reflected the “devastating” impact the tracker’s mortgage scandal had on its clients.

“The Central Bank has imposed a fine at the highest end of its sanctioning powers, reflecting the seriousness with which the Central Bank views KBC’s failures,” the statement said.

It described the impact of KBC’s failures on its clients, which related to 3,741 accounts, as “devastating and included a significant cost overrun and the loss of 66 properties,” including 11 family homes.

The regulator said the bank’s commitment to its investigation on the subject of tracker mortgages was “deeply unsatisfactory.”

“KBC caused avoidable and sustained damage to affected customers due to the unwillingness of the company to recognize its failures until December 2017 and take immediate action,” according to the Central Bank.

If KBC had adhered to the regulator’s guidelines, he said, “without the need for significant and sustained intervention from the central bank, the damage to its clients, particularly incidences of property loss, would have been significantly reduced.”

It comes down to the Central Bank’s industry-wide research on follow-up mortgages.

Through that investigation, the regulator found that “over the course of 2008, follow-up mortgages were becoming less and less profitable for KBC, resulting in the product’s recall in July 2008.

“The Central Bank investigation found that in doing so, KBC did not treat its follow-up mortgage clients fairly and put KBC’s financial interests above the protections its clients should have received.”

The regulator concluded that KBC had failed to adequately warn clients who were moved from trackers to fixed-rate mortgages that they would not be able to return to their tracking rates.

Not only did the bank not provide clients with “clear documentation,” KBC also failed to inform clients that they “were willing to pay more interest over the life of their loan,” the central bank said.

Furthermore, the Central Bank investigation found that KBC had inadequate mortgage systems to be able to comply with its regulatory obligations and that it had provided incorrect information to the Financial Regulator.