Irish Nationwide has been accused of computing mortgage arrears in a "pernicious" manner.

Irish Nationwide's penalty system can mean borrowers facing fines of tens of thousands of pounds, a mathematics expert has claimed.

Dr Emmanual Buffet, senior Court case against Irish Nationwide. However, he refused to make any further comments on the papers, which were lodged to court last Friday by a couple of mortgage-holders pursuing a case against Irish Nationwide.

According to Dr Buffet, using Irish Nationwide's fining system, a person who consistently missed £10 of each monthly payment would, after 20 years, end up owing £30,624 in penalty charges to the society, even though the missed payments would only add up to £2,400.

On a normal compound interest basis at 6 per cent, the amount of interest owing after 20 years would be around £2,200, making a total repayment of £4,640.

A spokesman for Irish Nationwide said the basis for additional charges on borrowers in arrears is to make it unprofitable to take extra unauthorised credit or to use it effectively as an unauthorised overdraft.

"The purpose is to get the borrower to regularise or address the arrears position as soon as possible. Once the position is regularised, the extra interest can be suspended, substantially reduced or indeed waived, depending on the individual circumstances of the case."

The society refused to comment on how much its arrears are or how many of its borrowers are in arrears.

Irish Nationwide charges a fine of 3 per cent per quarter on the cumulative compound interest rather than a fine after the first year of arrears. But the society's spokesman said this will be adjusted downwards shortly, following the general direction of interest rates.

Other societies, such as EBS, simply charge loan interest on whatever amount is outstanding and do not have any additional penalties.