Central Bank to assess ‘culture and behaviour’ in banks from April

Move comes following tracker scandal after which at least 97 customers lost a property

The Central Bank will assess the culture and behaviour of the Republic's five main lenders as requested by the Minister for Finance following the tracker mortgage scandal.

Starting in April, the bank regulator will "challenge the effectiveness of the underlying culture in banks" including AIB, Bank of Ireland, Ulster Bank, Permanent TSB (PTSB) and KBC, after which it will report findings to the Minister.

Addressing a behavioural science research group at University College Dublin (UCD), Derville Rowland, financial conduct director general of the regulator, said: "We are working with the Dutch Central Bank, recognised leaders in the supervision of behaviour and culture, who will support us in the inspections.

“Our vision for a financial services system underpinned by a strong culture of compliance, with firms and the people working in those firms acting in the best interests of their customers, is backed up by comprehensive and enforceable legislation, rigorous supervision, a credible threat of enforcement including powers of redress when consumers have suffered detriment,” she added.


By the end of December, the Central Bank had forced lenders to pay out €316 million to customers affected by the scandal, with more to follow as the remainder of the 33,700 customers who were denied tracker products or charged the wrong rates receive redress and compensation.


Ms Rowland said the bank is in the process of conducting enforcement investigations into four lenders – Bank of


, KBC, PTSB and Ulster Bank – with further investigations expected to follow. “In our enforcement investigations, the Central Bank will consider all possible angles, including potential individual culpability,” Ms Rowland said.

So far, 97 properties are known to have been lost on the back of the tracker scandal. The biggest offenders in this regard include KBC, where 33 customers lost a property, PTSB, where 31 lost a property and Ulster Bank, where 15 customers lost their family home. However, this figure is expected to increase.

"Given the fact that the number of impacted customers has increased dramatically to 33,700 in a short few months, it is now inevitable that the number of customers who have lost their home as a result of being denied a tracker mortgage will increase well beyond figure of 97 currently reported by the main lenders," said Fianna Fáil finance spokesman Michael McGrath.

“I would not be confident that banks are successfully contacting every impacted customer who had switched their mortgage or had repaid it in full. Further, it became very evident there is no consistency in the level of compensation being offered by the different banks,” he added.

Provisions made in respect of the tracker scandal now amount to around €900 million, €600 million for redress and compensation and the remainder for costs.

In her speech at UCD, Ms Rowland said “the vast majority of those working in the financial services sector are people who want to do the right thing by their customers”.

“Of course, I can’t promise you that when you go out to buy a mortgage or a car loan that you won’t ever encounter a pushy salesman or that there won’t ever be a bad apple working in the financial services sector,” she concluded.

Peter Hamilton

Peter Hamilton

Peter Hamilton is a contributor to The Irish Times specialising in business