Agencies blasted for failing to stop banks ‘ripping off’ tracker customers

Oireachtas Finance Committee accuses competition agency of being afraid of banks

The chairman of the Oireachtas Finance Committee has launched a blistering attack on the State's competition authority and the financial services ombudsman, accusing them of failing to protect tracker mortgage customers from being "ripped off" by banks.

John McGuinness said the agencies had done nothing to lift the lid on the overcharging scandal since it first emerged in 2009 or to help those seeking redress and were acting as if they were afraid of the banks.

At a committee hearing attended by the chairperson of the Competition and Consumer Protection Commission (CCPC), Isolde Goggin, and the Financial Services Ombudsman, Ger Deering, Mr McGuinness said consumers had been left high and dry by the agencies that were meant to protect them.

“All we hear at these meetings is how the consumer is being ripped off; how information is being withheld from that consumer to take any kind of a case; and when they [the banks ] come forward, records of meetings go missing,” he said.


Mr McGuinness asked Ms Goggins and Mr Deering how they could square this “type of culture” with their agencies’ actions. “Are you afraid to take on the banks in such a way as to make it clear to them that you are about your business?” he said.

Ms Goggin, however, said she believed the Central Bank's investigation was the best vehicle for achieving redress for affected customers and that the Central Bank had a duty to report any evidence of criminal behaviour to the CCPC.

But Mr McGuinness claimed the CCPC was failing to investigate the possibility of collusion on the part of the banks.

“So if each board of each bank made the same decision at the same time, that stinks of a cartel, and that’s what the Irish people believe and they believe the agencies of this State – that are there to protect – stood idly by from 2009 up until recently when this blew up,” he said.


Ms Goggin said while banks may have acted “unscrupulously” in pushing some customers off their tracker mortgage contracts, there was, to date, no evidence they acted as a cartel.

“We have not been provided with sufficient evidence to ground a criminal investigation into the presence of a cartel,” she said.

The Central Bank’s trawl into affected customers has uncovered more than 27,500 cases where the banks either denied customers their right to a low-cost mortgage linked to the ECB’s main lending rate or applied the incorrect rate.

The scandal involves all 11 lenders that sold tracker products into the Irish market during the period.

“Looking at the behaviour of the banks, it’s undoubtedly the case that they all started to withdraw tracker mortgages at the same time, but it’s also undoubtedly the case that they were losing their shirts on tracker mortgages, each and every one of them,” Ms Goggin said.

“Looking at it on an individual basis, it was absolutely in each bank’s interest to get people off tracker mortgages. Unfortunately that appears to be what prompted some very unscrupulous behaviour,” she said.

Evidence threshold

Ms Goggin said the evidence threshold, however, for opening a criminal investigation into collusion was high and that her agency could not “ go on a fishing expedition” as it would be thrown out of court.

Such a criminal investigation would require people who had witnessed agreements being made by the banks to come forward, she said, noting that the CCPC had an immunity programme for possible whistle blowers that might have directly participated in cartel activity.

Earlier Mr Deering said his office had been dealing with tracker complaints since 2009. He said his office had to date received 1,838 complaints with findings issued in respect of 683 complaints.

Of these 115 (17 per cent) were upheld, 59 (9 per cent ) were partly upheld and 509 (74 per cent) were not upheld, he said.

“A number of these findings directed financial service providers to restore tracker mortgages to complainants,” he said.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times