Litigation and Enforcement

Author: Clerkin Lynch LLP

Date Published 11/07/2022

Record Fine By Irish Financial Regulator

The financial services regulatory authority in Ireland, the Central Bank of Ireland (the “Central Bank”) has applied a record fine of over €80 million to Allied Irish Banks (“AIB”)  pursuant to its Administrative Sanctions Procedure (“ASP”). This is the largest monetary penalty yet imposed by the Central Bank under the ASP.


The Central Bank launched its Tracker Mortgage Examination (the “TME”) in 2015 as an industry-wide review to ensure that lenders were providing tracker customers with their related entitlements on mortgage products following extensive concerns that this was not occurring. AIB is the second largest bank in Ireland with approximately 2.8 million customers. Ultimately the investigation found that AIB had breached contractual duties and had failed to fulfil its obligations under the Code of Practice for Credit Institutions 2001 and Consumer Protection Codes 2006 – 2012. Over 10,000 mortgage accounts were impacted between August 2004 and March 2022 and AIB has admitted to 57 separate regulatory breaches.

Specific Findings

The key findings from the investigation are that AIB: Failed to consider the entitlements of customers when it withdrew its tracker mortgage product, breached customers’ mortgage contracts; delayed in rectifying the breach, and failed to take immediate and conclusive action to determine for these customers the financial implications of its wrongdoing; wrongfully excluded certain accounts from the review; failed to handle customer complaints in a fair and consistent manner; failed to properly manage related services to customers and failed to properly implement the TME’s Stop the Harm principles.

The Fine

The Central Bank in fact determined that AIB be fined €119,000,000. This was, however, reduced by 30% to €83,300,000 in accordance with the relevant settlement discount scheme operated pursuant to the Central Bank’s ASP for co-operation. The maximum penalty which the Central Bank may impose as a fine is the greater of €10,000,000 or an amount equal to 10% of the annual turnover of the regulated financial service provider. Such fines may be imposed pursuant to Section 68(b) of the Central Bank (Supervision and Enforcement) Act 2013, which significantly increased the Central Bank’s sanctioning powers. Recent years have witnessed a steady increase in the size of fines imposed. The Central Bank has now launched almost 150 ASPs and imposed fines of nearly €300 million. The size of the fine in this case was stated to have been imposed to reflect “the gravity of the failings identified” and their impact on customers impacted.

It is also worth noting that this fine is separate from the amounts which AIB has been required to pay in redress, compensation and account balance adjustments to impacted customers. The figures payable under these headings exceed €125,000,000 so far.