Springboard Mortgages, a subprime lender set up by Permanent TSB (circa 2006) has been fined €4,500,000 by the Central Bank of Ireland.

This fine comes on foot of a major examination which the Central Bank commenced into the tracker mortgage market.

Springboard failed to adhere to certain fundamental principles set out in the Consumer Protection Codes 2006 and 2012. This resulted in higher interest rates being applied to 222 customer mortgage accounts.  

According to the Central Bank's Settlement Agreement announcement (copy here), the average amount overcharged to a customer’s account was €19,351. However, overcharged amounts ranged from approximately €100 to a staggering figure of approximately €68,000.

It was noted by the Regulator that certain customers went into mortgage arrears during the period of overcharging and other customers were the subject of legal proceedings. 

This fine recognises the weight placed by the Central Bank on consumer protection and the gravity of the breaches cannot be ignored. In addition to the fine, Springboard has also repaid approximately €5,800,000 in redress and compensation to its customers in relation to the overcharging. To date the breaches have cost the firm €10.3million.

Regulated entities need to be cognisant of the penalty decision factors considered by the Regulator in imposing this fine, namely:

  • The impact on affected customers (higher mortgage repayments, entering into mortgage arrears and being subjected to legal proceedings for arrears on their mortgage accounts);
  • The number of customer mortgage accounts impacted by the breaches (222); and
  • The duration of the breaches (approximately 7 years).

It is imperative that regulated entities carry out regular internal audits to ensure that they act in the best interests of their customers that they have the proper systems, controls and resources in place to comply fully with their obligations under the Central Bank codes. 

The Consumer Protection Codes 2006 and 2012 are available on the Central Bank’s website www.centralbank.ie or to download here.

Leman Solicitors regularly advises on regulatory enforcement actions ranging from major investigations and high-profile disputes, to reputational risk management and compliance issues. Leman Consulting advises corporate clients about their very onerous regulatory obligations and how to ensure that systems are in place to minimise risk.