We need your help now
Support from readers like you keeps The Journal open.
You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.
If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.
Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
By continuing, you are indicating that you accept our Terms of Service and Privacy Policy.
THE HEADS OF the Central Bank were criticised today for failing to step in sooner and take action in relation to the tracker mortgage scandal.
Thousands of customers were overcharged by their lenders when they were either denied the right to a tracker mortgage at some point over the term of their loan, or charged the wrong rate of interest. In the worst cases, people lost their homes as a direct result of their bank’s failings.
Appearing before the Oireachtas Finance Committee today, Central Bank governor Philip Lane and his senior team faced harsh words from some members as they questioned how this was allowed to happen under the regulator’s watch for so long.
Chair of the committee John McGuinness told Lane that lenders had been “hoodwinking” the Central Bank.
“I hope you have a big mirror down there that you will look into,” he said.
The Fianna Dail TD did acknowledge that more recent remarks from Lane had been stronger and more critical of lenders.
In his opening remarks to the committee, the governor had spoken of “unacceptable failings”, about how they had “hauled in lenders’ senior management” and about how they will continue to challenge the banks “robustly”. He also said all possible angles will be considered in current and future enforcement investigations, including potential individual culpability.
McGuinness said he did not want Central Bank executives to “get into a comfort zone”.
I will not judge you on your language, I will judge you on the action you are prepared to take on behalf of customers who have been robbed by the banks.
He reminded the governor that he had told the committee the Central Bank was active on this issue in 2008. Prior to this current investigation, it had already challenged a number of lenders over their tracker mortgages, including an enforcement investigation into Springboard Mortgages – an offshoot of PTSB – which resulted in a €4.5 million fine.
McGuinness said recent movement from the banks to work through this issue was merely “a smokescreen” until the issue goes away, and not a culture change.
He also spoke of vulture funds who are rigorously pursuing Irish customers who are in mortgage arrears.
While the Central Bank delves into the culture of the banking sector in Ireland, McGuinness said the “next generation of bankers are being educated by the vulture fund managers such as capita and others into how you deal with customers”.
“Their attitude is shocking to a degree that no country or parliament or society should accept it – and you regulate them.”
Compensation
Lane confirmed to the committee that more than 13,000 customers are still waiting to get their money back and receive compensation. He said lenders have been “forced to pay €316 million in redress and compensation” so far and he expects everyone will be paid by June this year.
“Lenders are counting the cost of this scandal. In addition to the redress and compensation we require them to pay, these institutions are bearing significant administrative costs to conduct the examination in line with our requirements,” he said.
“This can be seen in their provisioning statements and their staffing levels. By way of example, the main lenders have now made combined provisions of circa €900 million in respect of the examination, broken down as approximately €600m for redress and compensation and €300m for costs, while one lender recently disclosed that it had up to 500 people working on its redress scheme.”
Fianna Fáil’s Michael McGrath took issue with the use of the word “forced” in relation to the money paid out, reminding Lane that this is “the borrowers’ own money”.
Senator Gerry Horgan also pointed out to Lane that with the average rate of compensation at 15%, the bulk of the €316 million paid out was customers’ money that the bank never should have taken.
He said a failure to pay money to Revenue, for example, would result in significant penalties and interest applied, more than 100% of the sum not paid in some cases.
“If you think compensation is 15% why wouldn’t you take a chance?”
Lane told committee members that the average compensation rate may go up as the examination continues. He also referenced the enforcement investigatons, which are likely to result in fines for the banks. And, he said “the reputational damage has been severe”.
The committee will be back later this afternoon with further questions for Lane and his team.
To embed this post, copy the code below on your site
There should be arrests made in relation to fraud and that decision should not be left up to the politicians. Of course it’ll never happen…
@Polly Dolan: very hard to prove
@Polly Dolan: you’re right Polly but do you honestly think it will happen in this corrupt little country, and to think that our government dares to criticize “undemocratic” countries. Problem is, all these guys socialise together so the bluff is fixed up over dinner,a pint or a round of golf, and while they’re at it, they bring another few friends in to sit on the “tribunal “. poor craters…
@Pat Bateman: why ?
@Pat Bateman: it’s pretty obvious that they knew that people were entitled to a lower rate of interest. Therefore they knowingly stole this money. Why is that hard to prove ? Are you a banker ?
@Polly Dolan: We would all love that but look at how much it cost the state to pursue Sean Fitz over a 9 year period. We don’t have the wherewithal nor the laws in place to take on these clever bankers.
@Polly Dolan: Where’s the fraud? Maybe sharp practices, maybe dishonourable practices but fraud?
@Pat Bateman: It is when a member of the prosecution team destroys evidence under a CCTV camera….
All those senior bankers should be sacked and loose all their private pension, prosecuted them for stealing customers money and causing some customers to be homeless and last but not lease convict vulture funds for corporate fraud that banks created for their buddies they should be locked up and the key thrown away.
@James Moore: Financial responsibility would be the best punishment but then you will find all these people with no cent in their pockets, all living on family / relatives money. Family / relatives who got suddenly very wealthy.
@cortisola:
When i said bankers that includes whoever gained from their criminal enterprise that means their family their family members friend people inside bank and outside banks all across the board should have to answer in a criminal court of justice.
Because it is a private bank masquerading as a regulator.
Apparently Shane Ross has accidently voted against his own drink-driving bill!
You really couldn’t make this stuff up.
@Matt Connolly:
Did you hear the one about the Irish politician….
You can only hope the worlds media don’t latch onto it.
@Matt Connolly: First there was a flock of sheeple who voted him last election.
@cortisola: he fooled them. Hopefully they now realize what a plonker he is
@Matt Connolly: he was stone drunk when he went to press the button. Hope he didn’t drive home after voting…!
Over 30 thousand customers were defrauded in this scam to a tune of 1 Billion euro.Lives ruined, houses lost, and where’s the outcry?
Everyone that has a mortgage should have their accounts forensically checked. This 30,000 people they tell us about may in all probability be the tip of the iceberg.
It’s Garda involvement that’s needed now. People have had their money stolen, some have lost their homes, many have been driven into bad health, some have committed suicide.
There’s to much discussion. Action is what’s needed now.
The central bank is part of the private banking system controlling the money supply. They are not government controlled like we are led to believe.
Tie these Bankers to a tree and horse whip them they might then get the message
No, take a look in their bank accounts, and see what they are being paid for gross incompetence .
Bankers,board members,who made decisions to commit fraud need to be arrested and charged,actions speak louder than words.the public want to see justice served.
The people affected need to band together and do a Class Action.
If anything the “private bank” could be included in the suit for not doing it’s job.
I think these enquiries in their current form are pointless, I mean politicians questioning bankers, more interested in protecting each other than hanging anyone, any arguing between them is just for show. Its like white collar criminals interviewing white collar criminals.
Yesterday the media carried a story concerning the social we are fraud by a French national. Certainly deserved to be brought before the courts. On the other hand the only two high profile criminal cases against bankers collapsed because of shredded documents by the state , and the other by inadmissible evidence. Once again the banks criminal actions will not be brought before the courts. Gangsterism facilitated by successive governments.
A Central Bank Governor of Ireland mentioning the ”REPUTATIONAL DAMAGE TO THE BANKS IS SEVERE” whilst he looked on over years with stupid RTE journalists during this period asking ‘What can be done about Tracker Mortgages’ and the only politician on the panel Pierce O’Doherty asked what she meant ? why should people be deprived of their tracker mortgage I don’t understand your question. Am I the only one to recall this.
This Central Bank Governor may not have held his position then but his concern for ”Bank Reputational Damage” is an affront. What insular planet is he on does he not know that people seeking financial support to buy a home are still directed to these same banks in Ireland.
He should resign immediately and if anyone in the Dail has the backbone to take this on ask for his removal.
Lane said ” And, he said “the reputational damage has been severe”.”
Banks have a reputation to preserve??????
It’s back to the future with the bank’s
And that’s the man who in the eyes of the government was the exceptional candidate for a senior position in the ECB ?
I wouldn’t let the Central Bank mind a sweetshop, the shoplifters would have a field day….
have your say