The extent of Ireland’s tracker mortgage scandal is as unclear as ever after yesterday’s revelation that hundreds more customers were incorrectly overcharged by their bank.
Gerry Mallon, the chief executive at Ulster Bank, admitted that it had identified another 1,500 customers to go along with the 2,000 it had previously disclosed. The information wasn’t contained in the bank’s mid-year results but was provided matter of factly when asked. “As we’ve continued to turn over files and bottom everything out, the latest number we have is around 3,500 mortgage customers [have been affected],” he said.
We now know that at least 23,500 borrowers were financially disadvantaged by the industry-wide scandal of lenders denying their customers the interest rates to which they were entitled. The figure has climbed steadily in recent years and shows no signs of stopping. In 2015, the Central Bank began an investigation of 15 banks to uncover the full extent of the issue.
Last year Bernard Sheridan, head of consumer protection at the Central Bank, called the episode a “scandal”. His boss, Philip Lane, the Bank’s governor, said the banks’ actions had been “systemic” and amounted to a “massive failure”. Mr Sheridan has since been promoted to acting deputy governor of the bank. Mr Lane, a man not prone to hyperbole, went on to suggest in December that the banks under investigation could have colluded to deny customers their contractual rights.
“I’m not going to rule out until these examinations are concluded the hypothesis of collusion but there was an economic imperative here for many of these banks. Essentially, I think what was happening was that they were trying to, [during] a period of financial stress, save money by charging customers, where they could, a higher, more expensive rate,” Mr Lane said.
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“Where these issues have arisen, it is clear that lenders have failed their customers. Moreover, I am acutely aware of the unacceptable impact that these failures have had on tracker mortgage customers, from the burden of paying more than they should, up to instances involving loss of ownership of mortgaged properties.”
He’s right that some customers suffered significant detriment at a time of already strained economic circumstances. As of last December, it was confirmed that as many as 90 borrowers could have lost their home as a result of, at best, their bank’s ineptitude or, alternatively, their deliberate and co-ordinated actions. How large that cohort has grown since is anyone’s guess. The Central Bank has serious questions to answer about its oversight of the banking sector and its response to the scandal.
Mr Sheridan rejected claims last year that the Central Bank had sat on its hands for years before launching an investigation. Others might not share Mr Sheridan’s view. More than €120 million has been paid out in redress and compensation to affected tracker customers to date. At the very least, the regulator must now press banks to complete their reviews and provide a final figure as to the number of affected borrowers.
After all, it’s in the regulator’s interest to know the final number, given that the final redress bill has been estimated at €500 million.
A potential half-a-billion-euro problem in the banking system is something one would imagine a regulator would be interested in clarifying.
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All customers must then be remediated through redress and compensation as swiftly as possible. In the meantime, the banks and regulator should be hauled before the Oireachtas finance committee as a priority to give an update on the review once our politicians return from their summer break.
Two years, 15 lenders and thousands of customers later it’s beyond time we had a resolution to the latest blight on the Irish banking industry.