Business Personal Finance

Saturday 21 July 2018

Watchdog waited years before acting on tracker scandal

The Central Bank waited years before acting on the issue
The Central Bank waited years before acting on the issue
Watchdog ragout

Charlie Weston Personal Finance Editor

The State's leading watchdog was warned six years ago about the scandal of banks like Permanent TSB trying to take valuable tracker mortgages off homeowners, it can be revealed.

Almost 1,400 people were wrongly denied good-value tracker rates by Permanent TSB.

The then Financial Services Ombudsman wrote to the Central Bank in 2009 calling for a probe across all the banks.

A year later the ombudsman found against Permanent TSB in the first of the current cases.

He was concerned over attempts to deny mortgage holders the option to return to their trackers after being on fixed rates - the same issue that has arisen at Permanent TSB.

But the Central Bank waited years before acting on the issue.

In 2009, then ombudsman Joe Meade wrote to the regulator asking for its officials to check all banks to see if they were reneging on agreements to let homeowners revert to trackers after coming off a fixed rate.

This is the issue that has forced Permanent TSB to launch a multimillion compensation scheme. It is estimated the scandal could cost the bank, which is majority State owned, up to €100m to put right.

Earlier this month, the Central Bank told Permanent TSB to compensate more than 1,300 mortgage holders who did not get trackers after coming off fixed rates.

The mortgage lender, which was bailed out by taxpayers, has admitted "deeply regrettable" overcharging and wrongdoing to the mortgage accounts, with some people losing their homes.

Consumer campaigner Brendan Burgess said this newspaper had reported in 2009 that the Financial Services Ombudsman had written to the Central Bank's Financial Regulator.

"The Central Bank has known about this issue since 2009. They have to explain why it took them five years to begin an enforcement action against Permanent TSB and six years before a redress scheme was put in place."

He added: "The untold misery and the losses of family homes could have been prevented had the Central Bank performed its consumer protection function properly."

The Central Bank was asked repeatedly by this newspaper over the last three days how long it had known about banks, and specifically PTSB, taking away trackers from those who opted for a fixed rate for a short period.

Yesterday, a spokesman said: "The Central Bank has been actively considering tracker-related issues as far back as 2008 when lenders were reminded by the Central Bank of their obligations to act in the best interests of consumers, when providing advice on switching tracker mortgages to fixed or variable rates."

It had been refusing to say up to then how long it had been looking at the issue.

The Central Bank insisted it wrote to banks in 2010 about tracker removal.


But it refused to give specific details about its actions in relation to Permanent TSB.

The Central Bank had responded after the Irish Independent gave it a news report from 2009 showing the Ombudsman had written to it calling for a probe of all banks.

And deputy Financial Services Ombudsman Jackie McCrum admitted her office has been raising tracker issues with the Central Bank for five years.

"Tracker issues were discussed, as part of our on-going dialogue with the Financial Regulator, from 2010," she said.

Yesterday the bank announced the members of a three-person panel that will review cases where people have lost their properties as a result of the over-charging, or where they are taking legal action against the bank.

They include former insurance ombudsman Caroline Gill, former president of the Law Society James McCourt, and accountant Cyril Maybury.

Irish Independent

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