AIB is assuring customers it will ‘proactively engage’ with them after it sent out letters warning they could face huge increases in their mortgage repayments.

The letters, sent to customers who mortgages were recently transferred to AIB from Ulster Bank, suggested they had been under charged for years due to a banking error.

They note that the mistake will have to be corrected – and their mortgage repayments will increase from October in order to recoup the underpayment.

The Irish Independent reports that some of the increases are relatively minor – however, some customers are facing increases of up to €600 per month.

WP3MYA Ulsterbank branch in Ashe Street, Tralee, Co Kerry, Ireland

The paper’s Personal Finance Editor Charlie Weston told Newstalk it is not a good look for the bank.

“For their tracker customers, it comes on top of nine separate European Central Bank rate rises,” he said.

“Then in the middle of that, to get a letter saying there has been an enormous miscalculation here, you have ben underpaying your mortgage for years so we’re going to have to ask you to pay extra to clear the mortgage in the term that is left.

“The timing couldn’t be worse.”

Mortgage hike

He said some of the letters warn of very significant increases.

“People are just taken aback that they get a letter out of the blue telling them it seems that Ulster Bank miscalculated their repayments and they have to take the hit here,” he said.

“There is no discussion about options or other ways of dealing with this.”

AIB

In a statement, AIB said it would “proactively engage” with any customer who got a “higher than expected” repayment change after the July European Central Bank interest rate increase.

It said their payments will not change for august and September and it will work with them to ensure their new repayment in Ocboter, “aligns with their expectations”.

It said the scenario it is investigating is particularly related to customers whose mortgage was due to expire in the short term and those who recently made an out-of-course payment.

“Some customers may have received a letter which indicates a larger increase in their repayments than they may have expected,” it said.

“We apologise to those customers for any anxiety caused and assure them that we will take all corrective action necessary to resolve this issue for them.”

Central Bank

Meanwhile, a spokesperson for the Central Bank told Newstalk that the Consumer Protection Code obliged AIB to “correct errors and handle complaints speedily, efficiently and fairly”.

“When failures or breaches occur that impact customers, the Central Bank expects regulated entities to remediate and rectify without delay, to ensure that customers are treated fairly and are put back in the position they would have been in had it not occurred,” it said.

The regulator noted that AIB customers should contact the bank directly if they have queries about their mortgage.

Andrew Lowth and Michael Staines