Tracker scandal: There is no limit on compensation, says Central Bank chief
Philip Lane says vast majority of confirmed cases to get refunds before Christmas
Central Bank governor Philip Lane has said there is no upper limit to the amount of compensation banks will have to pay customers they wrongly removed from tracker mortgage rates.
Mr Lane was speaking to reporters after he met Minister of Finance Paschal Donohoe on Monday to discuss the tracker scandal. The meeting came ahead of bank chief executives being called into the Department of Finance.
As many as 30,000 homeowners have potentially been caught up in the scandal which saw banks wrongly refusing customers access to loss-making tracker mortgages in the post-crash period.
Some of those who were overcharged went on to struggle to meet their repayments and some lost their homes through repossession.
Speaking to reporters after the meeting, Prof Lane said banks have paid out €163 million in redress and compensations thus far.
He said he expects the “vast majority” of the 13,000 confirmed overcharged borrowers to receive refunds and compensation before Christmas. However, the Central Bank’s focus remains on cases that haven’t yet been recognised.
“We think the vast majority of those cases will be paid out before Christmas. However, we continue to press the banks to expand their coverage to make sure that all those affected are included in their schemes. That is the current focus of our work . . . is to make sure yet more included so that all those affected will receive redress and compensation from the banks.
“Already we have seen over €160 million paid out and that’s only in relation to a fraction of the cases. We are not going to put any limit on the amount paid out. It is up to the banks to make fair and generous offers to those affected so the full scale of the harm is remedied”.
Wim Verbraeken, chief executive of KBC Bank Ireland, and Francesca McDonagh, chief executive of Bank of Ireland, met Mr Donohoe this morning, with Permanent TSB’s Jeremy Masding arriving in the late afternoon. Executives of both Ulster Bank and AIB are due to meet Mr Donohoe later this week.
On the way out of the meeting, Permanent TSB chief Jeremy Masding said the banks “absolutely” understood how serious Mr Donohoe was taking the issue.
“Of course, in the first instance, we listened to the Minister and we understand absolutely his position in terms of the seriousness of the issue,” Mr Masding said. “We recognise the seriousness of the issue. We confirmed to him that we continue to work night and day to fix it and we’ll be making a further statement this week.”
He again reiterated an apology to customers, and said that his institution wanted to pay compensation by Christmas.
“Certainly the desire of Permanent TSB is to do that, yes. I can’t comment around the operational plans of my competitors.”
Similar to the other lenders which met with Mr Donohoe today, Permanent TSB will release a more detailed statement later this week but Mr Masding would not be drawn on the prospect of the Government imposing sanctions on the industry.
“I focus on the job in hand. Myself and my management team joined in 2012 with a desire to try and rebuild Permanent TSB. That is what we are focussed on. This was a legacy issue that we have tried to manage and we continue to do that. I can’t comment on how the political system will manage this issue.”
On his way into meeting, Mr Masding said his numerous apologies to those affected by the tracker mortgages controversy still stand.
“I’ve apologised at every public forum that I have had since 2015 so my apology still stands,” he said. Mr Masding said he welcomed the opportunity to discuss the issue with Mr Donohoe and “to update him on how we are dealing with it”.
Mr Verbraeken told reporters after meeting Mr Donohoe: “KBC Bank Ireland can confirm that we had a productive and informative meeting with the Minister for Finance this morning .
“The Minister conveyed the Government’s great concern around the matter to us. We have undertaken to revert to the Minister on the matters discussed and we anticipate to be in a position to issue a statement later this week. In agreement with the Minister, this is all we have to say on the matter”
Ms McDonagh said: “ We had a meeting with the Minister and we listened very carefully to what the Minister had to say and his concerns. We are treating this matter very seriously and we’ll be making a statement in due course.”
Taoiseach Leo Varadkar insisted on Monday the taxpayer would not have to foot the bill for the compensation of those wrongly moved off tracker mortgages. He said Mr Donohoe was meeting the banks this week and he expected action to follow.
“The banks have it in their hands to resolve this in a matter of weeks or months if they want to do so. I would hope that after their meetings this week they will want to do so,” he said.
The Government had threatened a series of actions against the banks if they fail to compensate those affected by Christmas.
Mr Donohoe was expected to demand a clear timetable for the repayment and compensation of people wrongfully deprived of tracker mortgages when he meets the bank chiefs.
In the face of mounting public anger, the Cabinet will meet this evening at Government Buildings when Mr Donohoe will brief Ministers.
Meetings with the other banks will take place later this week.
Ministers have expressed impatience with the banks over the tracker scandal.