Industrial Alliance has agreed to fully reimburse some mortgage holders who did not get the benefit of their right to pay down their mortgage before being penalized for closing it out early.

The settlement was reached today through mediation talks with Regional Senior Justice Warren Winkler, the head of the Toronto class action team.

Industrial Alliance mortgage holders were entitled to prepay 15% of their mortgage without penalty provided that payment was made on a “regular instalment date.” Instalments dates could be weekly, bi-weekly or monthly.

Under the deal announced today, Industrial Alliance mortgage holders who paid off their mortgages early on a “regular instalment date” will be reimbursed part of the penalty they were charged.

In making the settlement, Industrial Alliance becomes the second financial institution to settle with its mortgage holders.

Earlier this year, Ottawa-based Civil Service Co-operative agreed to pay a total of $147,329 to 780 customers who found themselves in similar circumstances.

The remaining actions against most of Canada’s largest chartered banks continue before the courts.