Saturday 10 December 2016

EY will get first call on mortgage probe contracts

No indication yet of how much the industry-wide tracker home loans investigation will cost

Published 03/07/2016 | 02:30

'The Central Bank's core divisions - consumer protection supervision, legal, enforcement and banking supervision - are all involved.'
'The Central Bank's core divisions - consumer protection supervision, legal, enforcement and banking supervision - are all involved.'

EY, Grant Thornton and New York management consulting group Oliver Wyman have been shortlisted to carry out part of the Central Bank's investigation of tracker mortgages. Contracts to carry out part of the examination will go to those firms, though it is not yet clear how much they will be worth.

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EY will get first call, followed by Grant Thornton and then Oliver Wyman if the first two firms refuse any part of the work - a "cascade" system.

The financial regulator's examination of whether banks unfairly took customers off valuable tracker mortgage rates in the wake of the recession is well under way but is not expected to conclude until next year.

It follows revelations at Permanent TSB that thousands of customers who were entitled to trackers had not been offered them, pushing up their cost of borrowing. In some instances, people lost their homes. A redress programme was put in place by PTSB.

Hundreds of people are now thought to be working on the industry probe spread across the Central Bank, third party firms and lenders themselves, who have been ordered to carry out an internal review.

The Central Bank's core divisions - consumer protection supervision, legal, enforcement and banking supervision - are all involved.

A core team of six within the consumer protection team is leading the project.

"The bank has completed a procurement process and has established a panel of firms that can provide professional resources as required at critical points in the examination," a Central Bank spokesperson told the Sunday Independent. "The examination team is currently engaging with these firms regarding the first phase of the work to be completed."

The regulator would not estimate the expected cost of the examination.

"The work involved in phase two will be dependent on the outcome of phase one, the progress made by each lender and the level of testing to be completed by the Central Bank," the spokesperson said.

"Because of this, it is not possible to provide information on budgets at this time."

"However, the examination is of strategic importance to the Central Bank and we are committed to ensuring the required resources are dedicated to it in a planned and efficient manner in order to identify all tracker mortgage-related issues in the institutions covered by the examination.

"As the examination progresses through the required phases, the Central Bank has structures in place to increase the resources available to the project team as and when needed, to ensure that the examination is completed by lenders to the bank's satisfaction."

A large portion of the bank's costs are recovered directly from the industry through the levy applied to the banking sector and other regulated firms, the spokesperson added.

When asked whether they are setting up redress programmes for potentially affected customers, the country's four biggest banks (excluding Permanent TSB) - Bank of Ireland, Ulster, AIB and KBC - all said they were cooperating fully but gave little detail. However, KBC said it had appointed Deloitte to assist.

The last update for consumers on the examination was issued by the Central Bank in April and another is expected this month.

Sunday Indo Business

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