The Central Bank of Ireland was yesterday forced to admit that as many as 15,000 customers have been caught up in the tracker mortgage scandal.
The figure is significantly higher than the 8,200 affected customers that the Central Bank said it was aware of on Monday, while it now believes that close to 100 borrowers have lost their homes as a result of banks’ failings in relation to tracker mortgages.
Thousands of customers of 15 lenders were either wrongfully denied a tracker mortgage rate or incorrectly charged a more expensive tracker rate over several years.
Eurozone tracker rates move in line with the European Central Bank’s main refinancing rate and have tended to be much cheaper than standard variable or fixed rates over the past decade.
Philip Lane, the Central Bank governor, and Ed Sibley, its director of credit institutions, came under attack for their response to the tracker issue in a series of testy exchanges before the Oireachtas finance committee yesterday.
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John McGuinness, chairman of the committee, criticised the Central Bank for failing to provide complete figures in relation to the number of affected customers and accused the regulator of being scared of the banks.
The committee meeting had to be adjourned for about 15 minutes to allow Central Bank officials time to retrieve further information.
“What I’m hearing this morning is an unwillingness to stack up the numbers for us here and unwillingness to play hard ball with the banks and it would seem to me that you either feel bullied by them or that you’re fearful of them but you’re not engaging as I would expect you to engage, not just on this matter but the other matters the committee will touch on later,” Mr McGuinness said.
He said he found it hard to believe the Central Bank’s review of the tracker scandal was being slowed by banks’ poor information technology infrastructure.
“I’m shocked by the fact that the banks do not have sophisticated IT systems,” Mr McGuinness said. “When they wanted to pick out thousands and thousands of Irish people and chase them down relentlessly — relentlessly — to pay their mortgages they had all the systems in the world.
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“They could do what they liked and they did what they liked with small businesses and with individual people who had mortgages and it’s shocking and shameful that the Central Bank cannot force them into a position where they’re at least showing good faith with the people that we represent because those people have been pushed into poor health [and] some into suicide because of the actions of banks and I think it’s quite shocking that you deal with this in the way that you have up to now.”
Mr Lane said that he totally disputed Mr McGuinness’s characterisation of the Central Bank, for which there was “zero basis”, he added. Mr Lane said he expected its review to show that as many as 15,000 customers were affected by banks’ mismanagement of tracker loans.
To date only 8,200 have been fully processed by the review. Estimates provided by individual banks put the number of affected customers in the region of 10,800, however.
Mr Lane said that the discrepancy was due to the fact that some banks may have included cases that they expected would be eventually part of the review but which have not yet been processed.
He said that, “with hindsight”, the Central Bank should have moved quicker to address consumer concerns and launch a comprehensive investigation, although its power to act was curtailed by legal action between the banks and tracker mortgage customers.
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The Central Bank launched its industry-wide review in December last year.
In response to questioning from Michael McGrath, the Fianna Fail finance spokesman, he said that once issues at Permanent TSB and Bank of Ireland were identified in 2010, the regulator should have suspected that the mismanagement of trackers was not an isolated issue.
“I’m not going to disagree with you [Mr McGrath] that inferring from what was learned from, say Bank of Ireland and Permanent TSB, that well maybe this [was] a more general issue and maybe a more comprehensive approach could have been taken earlier, I’m not going to disagree with that,” Mr Lane said.
He said that holding individuals and institutions to account was “vitally important” to the credibility of the Central Bank’s supervisory system.
The review does not take into account a further 1,400 loans owned by Springboard Mortgages, a wholly-owned subsidiary of Permanent TSB, that were affected.
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The Central Bank last month fined Springboard €4.5 million for its treatment of tracker mortgage customers.
Also not included in the Central Bank’s figures were 2,100 Bank of Ireland customers identified in an earlier review in 2010.
Mr Sibley said that these customers were put back on the correct rate but have not, as far as the Central Bank was aware, been compensated.
He added that there were issues over whether or not additional supervisory powers conferred on the Central Bank in 2013 could be used retrospectively to ensure those customers would also be compensated.
The review is expected to be completed by the middle of next year.
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Pearse Doherty, the Sinn Fein finance spokesman, described the banks’ actions as “industry-wide theft”, while Mr McGrath said it appeared to be “systemic and wilful” on the part of the banks rather than a series of individual administration or communication errors.
Mr McGuinness warned the Central Bank officials that further banking errors would be made if it did not act forcefully in its supervisory role with lenders.
“My view on the banks is that they have not changed their culture; they’re still ducking and dodging and until you flex your muscle and make them pay up and make them respect you, we’re going to have further issues like this into the future,” he said.