The Irish Times view on the tracker mortgage scandal: this story is not over yet

The Central Bank fine on Bank of Ireland means all seven institutions will pay the price. But what about the senior executives who oversaw the policy?

The Irish Banking Culture Board (IBCB), the talking shop set up by banks four years ago at the height of the tracker mortgage controversy, was quick to declare the €100.5 million Central Bank fine imposed on Bank of Ireland for its role in the scandal as a “milestone day”. The closure of the last of seven enforcement cases taken against Irish lenders in recent years brought the final tally of tracker fines to almost €279 million.

The investigations into the seven – including AIB and its EBS unit, Ulster Bank, KBC Bank Ireland, Permanent TSB and its former subprime lending unit Springboard – uncovered scores of regulatory breaches. The industry denied more than 41,000 borrowers their right to cheap loans linked to the main European Central Bank (ECB) rate, or put them on the wrong rate entirely. Banks had pulled the product at the height of the financial crisis in 2008.

The total tally of properties that were lost as a result of overcharged borrowers running into financial trouble has come to 327 across the seven lenders – 98 of which were family homes.

The announcements of fines have typically been followed, in choreographed fashion, by statements from the latest bank under the spotlight. The template has long been set: lessons have been learned; they are now more customer-focused; and nothing is as important to them as winning back trust. We’ve heard it all before.

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As much as banks would like the closure of the last tracker enforcement case against a firm to draw a line under the debacle, this must not happen. The weight of responsibility now lies on the Central Bank to hold to account those banking executives – past and present – who were involved in breaches.

Under the current laws, the regulator can only pursue individuals for participating in wrongdoing after it has first found against their firm.

The long-awaited Central Bank (Individual Accountability Framework) Bill 2022, published by Minister for Finance Paschal Donohoe at the end of July, aims to allow supervisors to go after individuals first. The planned laws are not retroactive, of course. But they will make it much easier for the Central Bank to hold individuals to account in future for failings under their watch.

The unveiling of the Bill came four years after it was promised. Pushing it through the Oireachtas must be given priority in the coming months, if the Central Bank is to be in a position to put its draft rules and guidelines out to consultation in early 2023 and have the regime up and running, as planned, by late next year.

The culture of impunity that financial executives have enjoyed for far too long in the Republic must be brought to an end. That is essential if the banking sector is to have any chance of winning back the trust it claims to crave.