# EBS charging customers for mortgage insurance no longer in place?



## Brendan Burgess (21 Nov 2019)

Fears of new banking charges scandal as interest may have been overcharged on insurance products
					

Irish banking faces another overcharging scandal, as EBS investigates the way it has bundled charges for building and life insurance payments and mortgage protection insurance into its monthly mortgage bills.




					www.irishexaminer.com
				




It's not clear from the report what has happened here.

_The investigation involves cases where EBS charged customers for payments on premiums on insurance products that had closed but that the lender nonetheless continued to add interest to the mortgage repayments. _


I don't really understand this. 

I was asked last week if I knew anything about the issue and I said I didn't.  What was suggested to me at the time was 

1) EBS bundled insurance premiums and mortgage payments into the same payment
2) The customer went into arrears and so did not pay the insurance premium
3) They were charged interest on the insurance premium - which is not allowed 

I was not aware that it was not allowed to charge interest on unpaid insurance premiums. 
If my mortgage repayment is €600 and my insurance premium is €50 and I pay €300, are they supposed to take the €50 off for the insurance premium and €250 off the mortgage repayment? 

So does this problem arise only where the repayments are less than the actual insurance premiums due? 

Brendan


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## Brendan Burgess (21 Nov 2019)

OK, this is what might be happening. 

If a customer stops paying anything at all, then they are not paying their insurance premium. 

I presume that most banks pay the premium anyway so that the house is covered. 

However, maybe EBS stopped paying the premium when they were not being paid but continued charging it to the customer. 

Brendan


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## notabene (21 Nov 2019)

Brendan Burgess said:


> OK, this is what might be happening.
> 
> If a customer stops paying anything at all, then they are not paying their insurance premium.
> 
> ...



I was always under the impression that if you got your bank to provide your insurance life/mortgage etc and you defaulted or went into arrears that what was paid went to the mortgage. It was better to get them separately so the insurance would get paid even if you weren’t able to pay the full of the mortgage you could still pay your insurance


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## Brendan Burgess (21 Nov 2019)

I got a bit more information about the position of bundled insurance. 

A lender is not allowed to charge interest on insurance premiums. 

*Customers not in arrears *

ptsb charges the insurance premium on the day the repayment is due, so no problem there. 

Some of the other banks charge the insurance premium when they get the notification from the insurance company.  It is automatically added to the mortgage balance and so interest is charged on it until the date of the repayment.  This is wrong. 

*Customers in arrears *

When a repayment is made it is set against the insurance first. 

But if no repayments are made and the bank pays and charges the insurance, then they are charging interest on the insurance which they should not be doing. 

Brendan


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