Sunday 23 October 2016

Banks behave badly all the time - it's up to regulators to keep them honest

Published 08/08/2015 | 02:30

Former Ombudsman Joe Meade called for a probe in 2009
Former Ombudsman Joe Meade called for a probe in 2009

Permanent TSB got away with bullying and heaping misery on tracker mortgage holders because the Central Bank failed to take decisive action on the issue for years.

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The bank behaved badly. But then we know to our cost that banks and bad behaviour go together like rain and Irish summers.

What is really disappointing is that the regulators did not take the bank to task for its bad behaviour.

And now we know that the Central Bank, under the guise of its predecessor the Financial Regulator, was warned six years ago about the issue.

This newspaper published a story in 2009 detailing how then Financial Services Ombudsman Joe Meade had found in favour of a couple denied the return to a low-rate tracker after fixing.

The bank, which was not named, attempted to put them on a more expensive variable rate, which had an interest rate that was twice the tracker rate.

Mr Meade wrote to the regulators giving details of the case and calling for a probe across all banks to see if other lenders were denying homeowners tracker rates after they had come off fixed rates. This is the very issue at the core of the Permanent TSB over-charging.

It took until June last year for the Central Bank to act on the Permanent TSB cases, threatening it with what it calls "enforcement action".

This in turn forced Permanent TSB to halt a Supreme Court action it was taking against the Financial Services Ombudsman.

The bank had lost tracker restoration cases with the Ombudsman.

It then appealed these cases to the High Court, lost, and sought to get this overturned in the Supreme Court.

Now the bank is belatedly holding its hands up and is willing to compensate affected mortgage holders and those who no longer have a home loan.

This newspaper spent three days repeatedly asking the Central Bank how long it - and its predecessor the Financial Regulator - knew about tracker-denial issues.

Eventually it admitted yesterday that it has known there was an issue around trackers since 2008. But it won't say how long it has known about the Permanent TSB tracker problem.

It seems extraordinary that such a long time has elapsed since this issue arose and the Central Bank took action.

So much financial and emotional damage has been done in the meantime.

Our banks and banking regulators need to up their game.

Irish Independent

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