Central Bank looking at ‘senior’ bankers in tracker investigation

Regulator examining how thousands of customers were denied cheaper mortgage rates

Four of the five main lenders are close to completing their redress, Central Bank governor Philip Lane told the committee. Photograph: Nick Bradshaw

The Central Bank’s ongoing enforcement investigation into six mortgage lenders’ handling of the tracker scandal is also looking at the actions of individual senior bankers.

Appearing before an Oireachtas Finance Committee hearing on Thursday, Central Bank director general for financial conduct Derville Rowland said her staff are “looking at the conduct of the institutions and the senior persons in there at the time taking those decisions” as they continue their investigation. The regulator is weighing sanctions for possible rule breaches.

The Central Bank, which had begun enforcement investigations into the six main remaining mortgage lenders by the end of last year, is looking at how banks wrongly denied thousands of borrowers their right to a cheap mortgage linked to the European Central Bank’s main rate as far back as 2008, as well as their handling of the scandal in recent years, Ms Rowland said.

The six lenders are: AIB and its EBS unit, Bank of Ireland, Ulster Bank, Permanent TSB and KBC Bank Ireland. Ms Rowland said she did not expect any of the cases to conclude this year.



As of the end of August, lenders had identified about 38,400 customers affected by the debacle and had paid €580 million in redress and compensation, according to the regulator. Some 93 per cent of these had received offers of refunds and compensation by the end of August.

"Four of the five main lenders are close to completing their redress and compensation phases, and we are exerting significant pressure on the remaining lender to finish its process," Central Bank governor Philip Lane told the committee.

The laggard among the banks is known to be Ulster Bank, which said in April that it had identified an additional 1,500-2,000 customers affected by the examination. That is further to 3,500 cases previously disclosed by the bank.

A spokeswoman for Ulster Bank said that the UK-owned lender will not complete refunds and compensation until April of next year. “We apologise sincerely and unreservedly for the length of time it is taking for us to put this right and we are working hard to conclude remediation,” she said.

Law changes in 2013 doubled the maximum monetary penalty the regulator can impose on a financial firm for rule breaches, from €5 million to €10 million, or 10 per cent of turnover, and for individuals from €500,000 to €1 million. However, sources said that any potential rule violations are likely to have occurred before the thresholds were raised.

Senior functions

The Central Bank can also bar individuals found to have breached financial regulations from carrying out senior functions at a regulated entity for an indefinite period.

Ms Rowland said that the Central Bank remains “in dialogue” with An Garda Síochána and other authorities on the regulator’s investigations. She declined to say if her team have passed on specific findings of wrongdoing.

Ms Rowland said that more than 50 people who sought regulatory clearance to take on senior financial firm jobs, under a new fitness and probity regime introduced since the onset of the financial crisis, have withdrawn their applications, often as issues with their previous work had emerged.