State ‘may allow class action lawsuits’ over tracker scandal

Minister for Finance Paschal Donohoe has said the Government may consider allowing class action suits to be taken in Ireland in the aftermath of the tracker mortgages scandal.

“What has happened over the last week was absolutely unacceptable because it shines a light on what was happening for many, many years,” said Mr Donohoe.

“But I would have to say more broadly that there are many things the banks are involved in that are not shady, and we do have to be conscious as we talk about this even as we talk about the appalling behaviour that I’m so annoyed about.”

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.

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Some of those who were overcharged went on to struggle to meet their repayments, and some lost their homes through repossession.

“If this matter is not dealt with in the way that the Central Bank needs it to be dealt with, and I want it to be dealt with, I’ll begin to act in a different way as a shareholder,” said the Minister, speaking on RTÉ Radio 1 on Saturday.

Bankers’ bonuses

He said there are “lots of things” open to him in terms of actions that could be taken, “for example, in relation to what happens to bankers’ pay, what happens to bankers’ bonuses”.

“There will be other things open to me as a shareholder in relation to votes that can happen at AGMs, at EGMs - resolutions I can put down,” he said.

“And this is why I have said to all the chief executives that I will hold them personally accountable for the resolution of this issue. It’s unacceptable what has happened, not only how this issue happened with mortgage trackers, but for me alongside that recently in terms of the challenges that the Central Bank have had [in dealing with banks].

“Injustice was done, wrong was done. I and this Government will not equivocate on this matter, I have been very clear in articulating it during the week.”

He said he as Minister for Finance needs to allow the Central Bank to carry out its investigation before commenting on how and why the scandal occurred.

He indicated his belief that the Central Bank will use all the powers at its disposal to sanction banks and their chief executives should the evidence merit it.

He said class action lawsuits relating to the scandal could lead to “a huge amount of litigation . . . and a huge amount of additional cost”.

“Ultimately it will be up to my colleague, the Minister for Justice Charlie Flanagan, to decide if that’s something we want here in Ireland,” said the Minister. “And it could be, because also class actions have helped with the resolution of issues as well.”

On identifying those eligible for reimbursement, he said the Central Bank and banks involved “will meet this deadline” and said this work will be done by the middle of December.

He said about 11,000 people of the 21,000 so far identified will be reimbursed by Christmas. That is less than the “over 12,000” figure reported earlier this week.