Saturday 20 October 2018

Bank chiefs could face criminal cases over massive tracker scam

Central Bank director general (financial conduct) Derville Rowland with Governor Philip Lane. Photo: Gareth Chaney Collins
Central Bank director general (financial conduct) Derville Rowland with Governor Philip Lane. Photo: Gareth Chaney Collins
Charlie Weston

Charlie Weston

Criminal lawyers have been engaged by the Central Bank to see whether cases can be taken against the bank executives behind the tracker scam.

A leading senior counsel and international banking lawyers have been drafted in to build criminal cases to go after senior individuals in the banks that made the decisions to deny people their right to a good-value tracker mortgage.

The revelation comes as the Central Bank said the number of people affected by the tracker mortgage scandal had more than doubled in the past three months.

The latest figures from the Central Bank show that 33,700 mortgage accounts have been affected by what is emerging as the largest overcharging scam in the history of the State.

Banks have now owned up to an additional 13,600 cases since the last update for those affected was issued by the Central Bank in September.

The total number who lost homes has risen from 23 to 37, with another 79 buy-to-lets sold as a direct result of the tracker overcharging.

AIB has discovered an additional 4,900 cases, with most of these mortgage holders who were never on a tracker rate, but should have been.

Bank of Ireland has already said it has an additional 6,000 cases, while KBC Bank has admitted to an extra 2,500 cases.

There were warnings that the total of 33,700 tracker cases will rise, although the latest figure is thought to represent the majority of customers who have been affected.

There are indications from official sources that the numbers are set to grow.

Now it has emerged that leading criminal lawyer Paul Anthony McDermott SC, who specialises in criminal and administrative law, and international regulatory law experts, are examining whether criminal cases can be taken against senior bankers in a bid to hold them personally responsible.

Most banks are expecting fines of up to €10m, or 10pc of their revenue. This could mean fines of up to €300m, based on revenues of €3bn at the two larger banks.

"We are going after individuals if there is evidence of individual culpability," said Central Bank director general (financial conduct) Derville Rowland.

The fact that most of the bankers involved in denying customers trackers have since retired is not expected to be an issue, as the Central Bank is holding an inquiry into alleged regulatory breaches by Michael Fingleton, the high-profile head of the collapsed Irish Nationwide Building Society.

The Central Bank has already met senior gardaí on the issue, but there is no investigation under way by gardaí at present.

Almost €300m has been paid out in refunds of overcharged interest and compensation to mortgage holders denied the use of money that should never have been taken from them.

Governor of the Central Bank Philip Lane reacted to the latest surge in the number of cases by slating banks he regulates, saying they failed to put the customers first.

"The Central Bank recognises the devastating effects that lenders' failures have had on families and individuals.

"That is why we're using all our powers to force the banks into line and ensure all affected customers are included for redress and compensation," Prof Lane said.

He warned that his office was pursuing enforcement actions against the banks that denied their customers a good-value tracker rate, or put them on the wrong tracker margin, or failed to warn them of the implications of opting out of a tracker contract.

People affected by the tracker scam, who get back a tracker rate, are seeing monthly payments typically fall by €300.

Irish Independent

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