State defers action against banks over tracker scandal

Central Bank to consider more protection as some lenders delay compensation

Finance Minister Pascal Donohoe TD has said that most of the tracker mortgage customers who have already been identified as being affected by the scandal will receive compensation by the end of December. Video: Bryan O'Brien


The Government has deferred taking action against the banks over the tracker mortgage controversy as some lenders say they will not be able to compensate all customers until next summer.

Minister for Finance Paschal Donohoe has also asked the Central Bank to review the culture and behaviour of the banks to see if any further regulation or legislation is needed to protect customers.

The chief executives of the banks, who gave assurances to Mr Donohoe in meetings this week, are to be held responsible for fulfilling those commitments. “I will hold those banks accountable,” the Minister told the Dáil yesterday.

Mr Donohoe has also threatened to become an activist shareholder in the three banks in which the State holds shares – AIB, Bank of Ireland and Permanent TSB – if sufficient progress is not made by the banks in the weeks ahead.

Sources said the Department of Finance could resort to standing up at shareholder meetings and making a protest statement. Some sources suggested the State could lodge protest votes against individual bank directors.

Inside Business on the tracker scandal

Blocking requests

This would only occur if banks ignored directions to resolve the long-running controversy. The Minister indicated the State would take measures aimed at pay and other issues, such as blocking requests from the banks.

Mr Donohoe said the majority of those already identified by the Central Bank as being affected by the tracker mortgage scandal would receive compensation by the end of the year, with thousands more expected to be told if they are entitled to compensation by December.

The Central Bank on Wednesday said it remained in dispute with some banks about the extent of tracker-mortgage overcharging, The State’s five largest home lenders revealed the number of impacted borrowers may now be as high as 21,134.

Christmas deadline

This figure does not include the 7,100 people who had their cases settled before the Central Bank began its investigation in 2015. More than 12,000 of 21,134 will be compensated by Christmas, with the remainder to be told if they are entitled to compensation by December.

The Central Bank will decide in December on whether sufficient progress is being made. It signalled on Wednesday that it would notify lenders of the groups of mortgage borrowers it believed should also be included for refunds.

“It is now incumbent on the heads of the banks to ensure that all affected customers are identified and to ensure that redress and compensation are delivered swiftly to those to whom so much distress has been caused,” said Central Bank governor Philip Lane.

Tens of thousands of homeowners have potentially been caught up in the scandal, which saw banks wrongly refuse customers access to tracker mortgages after the crash. Some of those who were overcharged went on to struggle to meet their repayments.