Government has ‘lost patience’ with banks on tracker row – Varadkar

Action including sanctions to be taken if banks do not move to solve issue – Taoiseach

An Taoiseach Leo Varadkar says that the government "has lost patience' with Irish banks over the tracker mortgage scandal.

 

The Taoiseach has said his administration has “lost patience” with banks involved in the tracker mortgage scandal.

Leo Varadkar said “as a Government we have lost patience” with the banks, and described the controversy as “scandalous”.

Further action would be taken if the banks did not move to resolve the issue and the Government would impose sanctions, the Taoiseach added.

He said Minister for Finance Paschal Donohoe would call the banks’ bosses to meetings next week to “admonish” them over the delay in dealing with the 13,000 people affected by the controversy.

Earlier, a leading financial expert said the tracker scandal is the “largest scam ever perpetrated on customers in the State”.

Chief executive officer of the Irish Mortgage Holders Association David Hall said the number of people involved was upwards of 45,000, referring to the number of individuals associated with the 13,000 mortgage accounts identified in a Central Bank report on Tuesday.

Fixed-rate interest term

The controversy involves thousands of mortgage holders not being offered a tracker rate when they came off a fixed-rate interest term, or being charged too much for one if they were.

Delivering its latest report, the Financial Regulator said the numbers caught up in the controversy have jumped by 23 per cent to 13,000 in the last six months, and will rise further.

However, it warned that some mortgage-holders have not yet been told they were affected.“Two lenders may have failed to identify populations of impacted customer or failed to recognise that certain customers have been impacted by their failures,” it said.

Based on its challenges and the banks’ investigations, the regulator said it expected the total number of homeowners impacted by the scandal to rise significantly, possibly to over 20,000. It has now uncovered 23 cases where homes were lost as a result of the banks’ actions and a further 79 buy-to-let properties.

“The 23 families are probably 110 people directly affected rather than just 23 mortgages,” Mr Hall told Pat Kenny on Newstalk.

“Banks talk about mortgages it dehumanises; the number of people involved 13,000 is upwards of 45,000 people directly affected. Important to put that in context,” he said.

‘Outrageous behaviour’

“This is outrageous carry-on, outrageous behaviour, overseen by a regulator who is completely impotent in relation to dealing with this matter. We now need to separate finally the consumer protection which is the statutory responsibility of the Central Bank away from supervision of banks.”

Chief executive officer of the Irish Mortgage Holders Association David Hall. Photograph: Alan Betson
Chief executive officer of the Irish Mortgage Holders Association David Hall. Photograph: Alan Betson

He said it was a “miracle that so many lenders terminated a tracker product at the same time and they all interpreted their tracker documents as being exactly the same legal definition.”

“No doubt there was collusion. It is beyond any reasonable doubt that, or beyond any belief by any logical sensible person, that such a massive cover up could have just happened.

“Not one lender interpreted their contractual documents as possibly being of benefit to the customer,” said Mr Hall.

“There are parts of this that are complex, but there are parts that simple - this is a very straight forward academic proposition where you were offered a tracker, went on to a different product, on finishing that product you were supposed to be get your tracker back again.”

He said it was remarkable that the Financial Services Ombudsman was telling people to stick with the process . “His office has an abysmal record in relation to supervising and finding in favour of customers,” Mr Hall said.

“Because these contracts predate six years, which is the statute of limitations, the requirement that the Central Bank be involved and engaged to allow some level of redress, some of the lenders despicably stated that they’re outside the statute of limitation.

“This has crippled many people and has been going in for years.”

Disappointment

The ombudsman expressed disappointment with the banks for their response to the tracker mortgage issue. Ger Deering told RTÉ’s Morning Ireland the slow response of the banks indicated that the culture within the banks has not changed.

“They should at this stage understand the hardship this is causing customers. They should voluntarily move ahead and resolve the issue,” he said.

Mr Deering said since 2009 his office had received 1,800 complaints about tracker mortgages. Decisions had been reached in 700 cases but only 25 per cent of these had their tracker mortgage restored.

He said that he thought the best way for the matter to be resolved is for the banks to comply with the Central Bank investigation.

The Financial Services Ombudsman’s office carried out an analysis of 500 complaints about tracker mortgages, but Mr Deering said he could not pinpoint any one cause for the tracker mortgages issue.

“The banks differ in their approach. Some are concerned for their customers, but some look at the bottom line to see how they can save money.

“Tracker mortgages became uneconomic so they tried to encourage or deny people their tracker mortgages. That’s my own interpretation.

“Our role is to deal with the individual complaints.” He said he was encouraging people to work through the process and await the outcome of the Central Bank investigation.

Fianna Fáil’s Michael McGrath said there is a “lingering sense that we’re not getting the full story here and the banks have unfortunately been putting their own interests ahead of the interests of their customers.”

“Permanent TSB took their customers to the steps of the Supreme Court up to 2015, now we have a much wider examination. There are some really troubling aspects to the update provided by the Central Bank yesterday,” he said.

He said: “The Central Bank used their language quite carefully but if you read through yesterday’s report they talk about repeatedly challenging the banks on issue of redress and compensation. They shouldn’t have to do that.

“What really concerns me looking at yesterday’s report is there are are certain groups of customers that certain banks are looking to exclude. People who may have redeemed their mortgage in full and people who maybe switched their mortgage in recent years are not being contacted, they’re not being picked up by this process.

“That is a real concern. It’s not acceptable that here we are almost two years on and three quarters of those affected have not got their money back.”

The Central Bank is due to appear before the Oireachtas Finance Committee on Thursday.