Tracker mortgage scandal: Just one in four customers have received redress

Central Bank data shows 23% increase in those impacted to 13,000 with number set to rise

Hazel Melbourne and Thomas Ryan, victims of the tracker mortgage scandal, speak to the Oireachtas finance committee.

 

Just 25 per cent of customers impacted by the tracker mortgage scandal have received redress and compensation so far, a new report from the Central Bank reveals.

The financial regulator said the number of those impacted has jumped by 23 per cent to 13,000, and is expected to rise further. The Central Bank has called on all lenders to start their compensation programmes by year-end.

It’s now more than two years since the mistakes first came to light, initially at Permanent TSB, but the subsequent widespread failure of banks to rectify mistakes that were made in their treatment of tracker mortgage customers is a scandal that still shows no signs of being resolved anytime soon.

According to the latest update from the Central Bank, published on Tuesday, 13,000 impacted accounts were identified by lenders as at end-September - an increase of 23 per cent since March of this year.

Some 60 per cent of those did not receive tracker accounts, while a further 40 per cent did not receive the correct margin. As a result of their failings on the issue, lenders reported that 23 homes were lost, and a further 79 buy to let properties.

While lenders have now rectified the interest rates on 7,700 accounts, redress and compensation have been much less forthcoming.

Just 25 per cent of customers have yet received the money they are owed due to issues around their tracker, as well as been compensated for it, as just three lenders have started their redress programmes.

Some €120 million had been provided to about 3,300 customers by end-September 2017, in addition to redress and compensation provided by Permanent TSB and Springboard Mortgages.

Moreover, the Central Bank expects the total number of homeowners impacted by the scandal to rise significantly, possibly to more than 20,000 - indicating just how slow resolving the issue has been to date, as all of those impacted have yet to be identified.

The regulator’s approach

The Central Bank says it has “extensively engaged” with lenders to progress the issue, noting that “lenders overall reviews are subject to ongoing assurance work and vigorous challenge”. However, some would argue that its approach has not called lenders to account in a manner that has led to both timely and adequate compensation for affected borrowers.

The Central Bank is taking a three-pronged approach with lenders - identify impacted customers, stop the harm, and provide appropriate redress and compensation.

It argues that if it had sought a quicker resolution from lenders, consumers would have lost out. Indeed the report identifies a number of areas where resolution offers from lenders fell short, including either failing to offer, or unacceptably low offers of compensation to affected borrowers.

To a certain extent the Central Bank’s hands are tied in pursuing lenders, as redress legislation, which would allow it to compel lenders to introduce compensation programmes, can only be applied to cases occurring after August 2013.

To date, the regulator has imposed a fine of € 4.5 million on Springboard mortgages, the former sub-prime unit of Permanent TSB, while it is currently pursuing enforcement investigations against both Permanent TSB and Ulster Bank, with other enforcement actions also expected.

In addition, the regulator is expected to pursue two lenders - which it will not name - to the fullest extent of its statutory powers, for ongoing failures to identify customers that have been impacted by the scandal, and who therefore should be entitled to redress and compensation.

Looking ahead, the Central Bank expects that all lenders will have commenced providing redress and compensation to customers identified by lenders as impacted to date by year-end.