Irish banks are on their “last chance” to restore public faith in the industry, according to Minister of State for Finance Michael D’Arcy at the launch yesterday of the new Irish Banking Culture Board. The body has been established by the industry in the wake of the tracker mortgage scandal which denied low-cost home loan interest rates to almost 40,000 customer accounts. Some of those borrowers lost their homes as a result of being denied a tracker and the affair will cost the sector more than €1 billion.
Banks initially dragged their feet and refused to accept the scale of their liabilities. They eventually caved in under the weight of pressure from the Central Bank and politicians, and the testimonies of many borrowers whose lives were devastated by the impact of how they were treated. D'Arcy said it did "terrific damage" to the image of the sector. Yet for many consumers, so soon after the collapse of the sector at massive cost to the public purse, it merely reinforced their long-held view of banks as being dishonest and unethical.
Mr Justice John Hedigan will chair the board of the new body for three years. He described its establishment as "just the beginning" in a long process of consultation and reform to achieve "real, lasting and effective cultural change", adding that it gave the industry the best possible chance of rebuilding faith in the sector.
On a positive note, the 14-person board comprises nine non-bankers, including financial adviser Padraic Kissane, who has led a long campaign on the tracker-mortgage issue. Yet there will be much scepticism that this new body, funded by the five retail banks here, can deliver real change in an industry regularly convulsed by scandals.
Culture is defined by corporate values and it flows from the top of an organisation. It determines how decisions, big and small, are made on a daily basis, and shapes the behaviour of employees. It is questionable if a one-size-fits-all culture can be designed for an entire sector. Even if it can, it will take a long time to repair the damage that has been inflicted on the reputations of Irish banks over the past decade.