The Central Bank said the fine is at the highest end of its sanctioning powers, reflecting the gravity with which it views KBC’s failures, which had a devastating impact on the customers involved.
Unsatisfactory
It also said KBC’s engagement and co-operation with the Central Bank was deeply unsatisfactory and avoiding this could have reduced customer harm, particularly incidences of property loss.
The Central Bank determined that the appropriate fine was €26,162,857, which was reduced by 30% to €18,314,000 in accordance with the settlement discount scheme.
This fine will to be paid to the Exchequer.
In addition, KBC must pay €153,524,363 in redress, compensation and account balance adjustments to its impacted tracker mortgage customers.
The Central Bank’s investigation found that, KBC’s withdrawal in 2008 of increasingly unprofitable tracker mortgages failed to treat its existing tracker mortgage customers fairly and put KBC’s financial interests above the protections their customers should have been afforded.
Director of Enforcement and Anti-Money Laundering, Seána Cunningham, said “The Central Bank’s investigation into KBC has revealed a stark example of the very real harm caused to people when financial service providers fail to treat their customers fairly.
“By placing their own financial interests ahead of their customers’ best interests, KBC failed to adequately consider their obligations under the Consumer Protection Codes, which were put in place in order to protect customers in their dealings with financial service providers.
Impact
“The impact of KBC’s actions on their customers was devastating and avoidable. By overcharging customers over extended periods, KBC forced people into arrears, including certain customers whom KBC knew were already facing financial difficulties.
"Some customers suffered the most severe impact with 66 properties being lost by customers, 11 of which were family homes.
“Our investigation found KBC persistently refused to accept its failings despite having multiple opportunities to remedy the detriment that it was causing to its customers over an extended period.
“KBC’s actions in this regard … were simply unconscionable.”
Review
Cunningham said that KBC’s initial review of their mortgage loan book identified only 93 impacted customer accounts when the total number was actually over 3,700.
This was revealed only following the sustained challenge and intervention of the Central Bank, she said.