2. Deputy Pearse Doherty asked the Minister for Finance when he will receive the next update from the Central Bank with regards to the tracker mortgage examination; and if he will make a statement on the matter. (Question 51309/17 asked on 30 Nov 2017)
Deputy Michael McGrath: Both questions are very similar. They ask the Minister to provide an update on the tracker mortgage scandal, in particular following his meeting with the banks and the subsequent update we got from Bank of Ireland that an additional 6,000 mortgage accounts had been identified as being affected. This is an opportunity for the Minister to give the House an update on the overall picture, whether he has heard anything since from the Central Bank or if it will still be mid-December when he gets a report from it, as he set out in October.
Minister for Finance (Deputy Paschal Donohoe): I propose to take Questions Nos. 1 and 2 together.
The Central Bank has advised me that in its most recent update of progress on the tracker mortgage examination, which was published last month, approximately 13,000 impacted accounts were identified as at the end of September through the industry-wide Central Bank examination. Prior to the examination, the Central Bank ensured a further 7,100 cases involving tracker mortgage issues were rectified and remedied.
Given the size and complexity of the task, the system-wide examination is taking time to complete. The Central Bank has advised that lenders are at varying stages of the process and that they are being challenged by the bank where the Central Bank is not satisfied with their reviews or redress and compensation proposals. All relevant lenders have now provided phase two reports to the Central Bank. However, the Central Bank’s assurance work is ongoing and it is expected that additional accounts will be identified as this work progresses. As the Deputies will be aware, since last month’s Central Bank update, Bank of Ireland has now agreed to include 6,000 additional accounts within the scope of the tracker compensation scheme.
Some lenders have commenced payment of redress and compensation to impacted customers, and the Central Bank expects that all remaining lenders will have implemented their redress and compensation programmes by the end of the year, with the majority of impacted customers receiving their redress and compensation by then. The Central Bank’s priority continues to be to ensure that lenders identify all customers affected by their unacceptable failings and that they pay appropriate redress and compensation. The Central Bank will continue to pursue lenders accordingly, in line with the framework of the examination. The timing has not changed. The Central Bank will provide me with a further update report in mid-December on progress in relation to the tracker examination.
Deputy Michael McGrath: This scandal is growing arms and legs. The 13,000 has now become 19,000 when one includes the extra 6,000 from Bank of Ireland. Prior to that examination another 7,100 cases were uncovered. Between those alone, the total is now of the order of 26,000 mortgage accounts affected. Some banks have provided ranges of potential affected customers. The Minister has acknowledged that the number will grow.
The issue I wish to hone in on is that of compensation, because it seems to me that there is no consistency across the various institutions. For AIB, it ranges between 15% and 30%. For Bank of Ireland, it seems to be a flat 10% in compensation and redress. For Ulster Bank, it is 12% for non-arrears and 13.5% to 20% for those in arrears. Permanent TSB seems to be in the region of 10%. My view is that the question of compensation should be entirely removed from the banks, and if that cannot be done on a mandatory basis then it should be done on a voluntary basis. There is no consistency. In instances where the harm is broadly the same, the compensation should be broadly the same, but it is not. It can vary by two to three times. That is simply not good enough. That is an issue I would like the Minister to address.
Deputy Paschal Donohoe: In recent weeks I met the Governor of the Central Bank again on this and other matters. I also met the Financial Services Ombudsman, whose organisation will play a very important role in the aftermath of more citizens receiving compensation and redress from the banks.
As to whether I expect the numbers to grow, the answer is “Yes, I do”. That is why I was clear that a crucial piece of work which needs to be done before Christmas is to find out conclusively who has been affected. As concerned as I am about those who have been affected, I have always been very clear that I want to know whether there are other customers of these banks who may have been affected but who do not know, and also customers who believe they are affected but who are in dispute with the banks in this regard. I expect that matter to be resolved by the middle of December.
Compensation levels are a matter for the Central Bank and the Financial Services Ombudsman. They have been challenging the banks on what has been offered. At the end of what has been a protracted and unacceptable affair within Irish banking, on top of all the other issues we have had to deal with, people have to be treated very fairly and they have to understand why they are treated that way.
Deputy Pearse Doherty: With regard to the update, I was hoping we might have some more concrete figures. As we know and as Deputy Michael McGrath has alluded to, since the announcement there have been 6,000 additional victims of the tracker mortgage scandal in Bank of Ireland. There is no certainty, however, and there are no targets for when all 6,000 individuals will be compensated and have redress. People are still not clear on the deadline. They are very unhappy with the deadline set for Ulster Bank, for example. It can be extended for the next seven months.
Also arising are the issues of adequate compensation and people being put back on the adequate rate. The Minister will be aware that the Dáil passed a motion stipulating that the banks publish a weekly update on their position, detailing all customers affected and the number who have had redress and who received compensation. The Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach was to be updated but that has not happened. Will the Minister ask the banks to adhere to the will of this Parliament, which is that the committee be given a weekly update, as we all agreed in a motion passed unanimously a number of weeks ago?
Deputy Paschal Donohoe: On the Deputy’s three questions, by the middle of December we will have to know the total number of people affected by this scandal. It continues to be vital to the Government to establish conclusively the number affected in this extraordinary episode which has caused such distress to so many and to ensure this is accepted by the banks in question.
On the question on Ulster Bank, I am not happy with the timing the bank has provided to me. I have engaged on this matter with the Central Bank, which is overseeing it. It has indicated that it believes the timescale given is the quickest in which Ulster Bank can do what is proposed, but it will continue to push Ulster Bank to try to have the work done sooner because its timing is different from the timings of the other banks in question.
With regard to the weekly update, I was not aware that the information was not being provided. I will follow up on the matter. My view, however, is that the best time to do this work would be after the Central Bank has published its report, which will be in December. At that point, we must know who has been affected and not affected. Until we know, providing weekly updates will not be helpful in getting the right agreement and solutions in place for all who have been affected. I will follow up on the matter, however.
Deputy Michael McGrath: The amount of compensation an affected person gets is as if it were determined in a game of roulette. There is no consistency across the various institutions. I am asking the Minister whether he agrees the power to decide on the level of compensation should be removed entirely from the banks. Currently, there are appeals panels but they are under the umbrella of the institutions concerned. There is absolutely no consistency. I have given the Minister the figures. The rate ranges from a low of 10% or so up to a high of approximately 30%; it depends on which institution one is with. That is simply not on. Where the harm is the same, the compensation should be broadly the same.
On the allowance for professional advice, AIB is paying €615 while Bank of Ireland is paying €250. This is not on. Even now, people are not being treated in a consistent fashion by the banks. I ask the Minister to consider this. The Central Bank does not have statutory powers but I firmly believe that the issue of compensation will become the story eventually when the institution gets to the bottom of who has to be included and ensures they receive the correct rate and redress. The compensation issue is coming down the tracks very quickly. The current structure is just not good enough.
Deputy Paschal Donohoe: The Deputy has made two points. First, for the purpose of achieving complete clarity, I must state the assessment panels or appeals panels in place are not under the umbrella of the banks in any way. I have seen the names of the individuals on the appeals boards and I am absolutely satisfied they are people of good and independent standing who will not be influenced by the opinions of the banks or me on this matter.
Deputy Michael McGrath: They are set up by the banks.
Deputy Paschal Donohoe: But the individuals will not be influenced by them. It is very important to be clear on that. If the Deputy has any concerns about this or views on how the arrangement could be strengthened, I will be very happy to hear them and determine how we can achieve what is proposed.
With regard to compensation levels, we have to reach an agreement with the banks, based on the powers available, on who will be affected first and how they will receive redress and compensation. There will be differing levels of compensation for people. The main factor that should influence this should be the individual’s circumstances. I expect and want everybody to be treated fairly in this matter.
I should have said in responding to an earlier question by the Deputy that, since this issue developed, I have met a number of people who have been directly affected. The Oireachtas committee had met people; I had not. I felt it was appropriate to do so. I met over recent days a representative group of affected people. I already knew about the level of stress caused for people. That has been confirmed to me again. A reason I met the ombudsman recently was to deal with what will happen in the aftermath of the publication of the report in December.
Deputy Pearse Doherty: The issue of compensation has been discussed widely at our committee meetings for many months now. We are in sync here in believing the arrangement is not working. We have heard testimonies showing it is not. I believe this will be dealt with only through the courts unless there is action to set up some type of uniform redress scheme. This is why we have taken forward the class-action legislation.
On a separate matter, I have brought to the attention of the Central Bank that it was a policy of Bank of Ireland, where customers with tracker mortgages sought to restructure loans, to add 1% to the tracker mortgage rate as part of the restructuring. I teased this out with the Minister in parliamentary questions over the past week or so. The answer obtained, through the Central Bank, was that this is not allowed unless it is the only viable option for the customer. The matter would have to be dealt with individually, and each individual would have to deem it the appropriate action. My information, which I have on good authority, is that what I describe was policy and standard practice within the bank. It was absolutely wrong, therefore. The Central Bank was not aware of this. I am following this up with it. I ask the Minister, on behalf of those customers whose mortgages were restructured and who had an additional 1% added to their tracker mortgage rates as a result, to take up this issue now instead of having to deal with it six or nine months down the line when we eventually force action on this matter. Will the Minister bring it up directly with the Central Bank and Bank of Ireland, in which he has a significant shareholding on behalf of the State?
Deputy Paschal Donohoe: Yes. As I indicated to the Deputy in response to the parliamentary question he put to me, we had to follow up on this matter with the Central Bank. The practice to which the Deputy is referring, on which he has had information made available to him, should not have occurred. It is another example of the appalling way in which this matter developed and has since been handled. If I can play a role in dealing with it, in the aftermath of the Central Bank finally determining who has been affected and who has not, I will do so but I must emphasise to the Deputy that the regulatory body dealing with all of this is the Central Bank and that I have to respect the work it is doing in this area and allow it to do it. During the engagement that I will have with the banks in the aftermath of the report being published in December, there will be an opportunity for me to bring this matter up. I will do that. However, the body with which I will first bring it up is the Central Bank and I will be supporting its efforts in this area.