Sunday 15 September 2019

Blow to AIB as it now faces tracker sanctions

Bernard Byrne, chief executive of AIB Photo: Tony Gavin
Bernard Byrne, chief executive of AIB Photo: Tony Gavin

Charlie Weston and Cormac McQuinn

Attempts by AIB chief Bernard Byrne to rebuild its tarnished reputation have been dealt a severe blow after it emerged it is now facing sanctions for ripping off its customers.

The bank, which is 71pc-owned by the taxpayer, faces enforcement action over the tracker mortgages scandal as the watchdog launched a blistering attack on bankers.

Central Bank deputy governor Ed Sibley warned lenders embroiled in the controversy to "take a long hard look in the mirror" as he warned they had not learned from the crash.

"Moreover, I expect the boards, the individuals on the boards and the executives to be accountable and to be held to account for not only the initial decisions which started the consumer detriment, but the persistent and ongoing behaviours and decisions that magnified this harm over an extended period," he warned.

He said the tracker mortgage scandal was the latest in an "unacceptably long list of cultural failings in financial services firms".

The move by the Central Bank to take enforcement action against AIB has shocked its executives, who insist they have been co-operating with regulators on the massive tracker probe.

AIB had presented itself as eager to rectify the damage done by the tracker overcharging issue. Chief executive Mr Byrne (right) said last month he was spearheading the rebuilding of the bank's tarnished reputation with a focus on social objectives. AIB has already admitted to 4,600 tracker overcharging cases, setting aside €190m to cover the cost of putting customers back on low tracker rates, refunding them overcharged interest and paying compensation. Many of the customers have yet to get refunds.

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But yesterday it emerged AIB is facing enforcement proceedings from the Central Bank because it overcharged so many customers. Experts said more AIB tracker cases could emerge.

Finance committee chairman John McGuinness said there had been "a first step" by the Central Bank in "bringing the banks to order" over the tracker scandal. But he added: "There's a hell of a lot more that needs to be done".

Mr McGuinness said his committee intended to bring in the Central Bank first, and then AIB and the other banks involved in the tracker mortgage controversy for renewed grillings in the new year.

Other lenders being probed include Permanent TSB, Ulster Bank, KBC Bank and Bank of Ireland.

The regulator has already fined Springboard, a former subprime division of Permanent TSB.

Around 20,000 cases have been admitted to by all of the banks which have been told to examine their mortgage books.

But independent expert Padraic Kissane now expects the total number to rise to in excess of 35,000.

Mr Sibley said on the tracker scandal: "I expect all the main banks will be subject to Central Bank enforcement investigations."

However, AIB said it was not made aware of enforcement investigations related to the tracker review programme by the Central Bank.

"The tracker review is ongoing, and is subject to continuous engagement with the Central Bank to ensure that it is conducted in line with the framework," it said.

Banks that are subject to enforcement actions face fines of up to €10m. Mr Sibley called for bankers responsible for the tracker scandal to be held to account.

Speaking at an Eversheds Sutherland conference on leadership and culture in financial services, he said the restoration of trust in financial services is "vital". Mr Sibley said the tracker mortgage scandal was an example of an "is it legal?" attitude, which still pervades.

Irish Independent

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