Banks ‘could turn nasty’: Retired court official reflects on dealings with sector

Former High Court master reflects on absence of whistleblowers in wake of tracker scandal

A retired senior court official who managed much of the litigation taken by banks after the financial crisis has said they “could turn nasty and superior” if their sworn evidence was challenged.

Edmund Honohan, who has just recently retired as master of the High Court, managed huge volumes of litigation over many years where banks were seeking judgments and possession orders, including litigation involving some of those affected by controversial tracker mortgage practices engaged in by banks.

He was frequently and publicly critical of how some of that litigation was conducted on behalf of banks.

On Friday, Mr Honohan told The Irish Times: “If the banks’ affidavit evidence was challenged, they could turn nasty and superior in reply. I think this was the fault of their solicitors drafting arrogant put-downs to win the case. The problem then was, the bank officials would sign on the dotted line.

“Not enough whistleblowers maybe … Why was that?”

He made the comments after the Central Bank earlier this week imposed fines totalling some €100 million on AIB and EBS over their handling of tracker mortgages.

A financial adviser who helped expose the scandal said a traumatised individual or family is “behind every single one” of the estimated 40,000 bank accounts affected.

Pádraic Kissane said there is deep reluctance among those affected to speak out publicly and some who lost their homes, as a result, have never told their close families the reason why because they were too ashamed or embarrassed.

“I had one client who spoke out and other members of his family were furious with him for doing so.”

Many people underwent enormous stress which, he believed, contributed to their contracting illnesses, Mr Kissane said. “The number of cancers went off the scale. What happened here was financial abuse which not only affected the financial welfare of people but also their physical welfare.”

While describing the fine imposed on AIB and ESB as substantial, Mr Kissane said the impact on the affected customers is to “bring the wounds back to the surface”.

“The anger goes up by a number of notches,” he said. “I think it just infuriates people because the fines just go back to the exchequer.”

A member of the newly established Irish Banking Culture Board, Mr Kissane said he believed the level of the fines imposed, associated reputational damage for the banks and tighter regulation will guard against any similar scandal in the future. “There appears to be a cultural change,” he said.

Many affected customers, he observed, were unaware they were entitled to compensation.

Tracker mortgages

An estimated 1,000 cases seeking compensation are before the Financial Services Ombudsman and a number are also before the High Court, he said.

Sinn Féin TD Rose Conway Walsh, a former member of the Oireachtas finance committee who has advocated for people affected by the banks’ conduct over tracker mortgages, said fines alone will not deter such conduct.

“It’s a substantial fine but it will be passed onto customers and I don’t think it’s a sufficient deterrent against such behaviour,” she said.

There were 96 regulatory breaches involved in this scandal and laws are necessary to ensure it does not happen again, she said.

“People need to know that it will never happen again and that senior bank executives who choose to make such decisions will be held to account.”

Mary Carolan

Mary Carolan

Mary Carolan is the Legal Affairs Correspondent of the Irish Times