Governor says Central Bank had to force banks to deal with tracker situation

Philip Lane says not all lenders addressed ‘unacceptable failings’

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


The Central Bank was pushed to the “limits of its powers” to force banks to deal with their “unacceptable failings” on tracker mortgages.

Central Bank governor Philip Lane will tell the Oireachtas Finance Committee today that “all lenders did not sufficiently recognise or address the scale of those unacceptable failings” until his institution intervened.

The governor’s opening statement was sent to committee members last night, after Taoiseach Leo Varadkar told the Dáil the Government has “lost patience” with banks involved in the controversy.

“The Government will take further action if we don’t see further progress and much more quickly, whether that’s through enhanced powers for the Central Bank or increased taxation imposed on the banks,” Mr Varadkar said.

‘Admonish the banks’

Minister for Finance Paschal Donohoe will also meet and “admonish” the banks involved next week.

In his opening statement, Mr Lane said an examination of the scandal by the Central Bank had taken some time because banks had not fully addressed or dealt with the problem. The examination would be “at a more advanced stage” if the banks had done as had been asked, he said.

The Central Bank has defended the pace of its inquiry, which started two years ago. Its latest update, published earlier this week, showed about 13,000 people have been affected and the final total is expected to rise to more than 20,000. A further update from the Central Bank will be published early next year.

“As the Central Bank progresses this work, other lenders will be similarly challenged,” Mr Lane said.

He also identified a number of cases where initial proposals for redress and compensation from lenders “fell materially short of the Central Bank’s expectations”.

‘Low payments’

Examples includes incidents where there was a failure to offer compensation, “unacceptably low offers of compensation” and “unacceptably low payments” for those affected to seek independent advice.

Mr Lane says there was also a failure “to acknowledge certain types of detriment sustained by customers, for compensation purposes, including customers that switched lenders as a result of being on the incorrect interest rate”.

He said all lenders are expected to have started “redress and compensation” by the end of the year. The Central Bank is liaising with organisations such as the Competition and Consumer Protection Committee, the Financial Services Ombudsman and An Garda Síochána.

Financial Services Ombudsman Ger Deering has also expressed disappointment with the banks for their response to the tracker mortgage issue. He said the slow response indicated 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 his office had received 1,800 complaints about tracker mortgages since 2009. Decisions had been reached in 700 cases, but only 25 per cent of these had their tracker mortgage restored.

His 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.”