'No ceiling' on compensation for people affected by tracker mortgage scandal
Governor of the Central Bank, Philip Lane, has said there is no ceiling on the amount of compensation to be paid out to those affected by the tracker mortgage scandal.
Mr Lane said today the body wanted to see banks pay "reasonable" compensation to those who were harmed when their bank incorrectly took them off tracker rates.
"Already we've seen €160m paid out and that's only in relation to a fraction of the cases. We are not going to put any limit on the amount paid out. It is up to the banks to make fair and generous offers to those affected is that the full scale of the harm is remedied," he said.
"I don't want to put an upper limit, I want the banks to be as generous as is reasonable given the harm suffered by those affected in this case."
When asked about the suggestion that the Central Bank could lose its consumer protection mandate, he said the bank is focusing on "our work now which is fully committed to protecting consumers".
Mr Lane was speaking after a meeting with Finance Minister Paschal Donohoe.
It is now believed that banks at the centre of the tracker mortgage scandal will begin paying compensation to their victims by Christmas.
Representatives from Bank of Ireland, Permanent TSB and KBC Bank will meet with Finance Minister Paschal Donohoe today in what Government sources are building up as a “showdown”.
Over the course of the week, CEOs of eight other institutions that overcharged customers will be hauled in for meetings, including Ulster Bank tomorrow and AIB on Wednesday.
Meanwhile, taxpayers will not be left to foot the bill for compensating people wrongly denied a tracker mortgage by the banks, Taoiseach Leo Varadkar has said.
"The banks have it in their hands to resolve this in a matter of weeks or months if they want to do so. I would hope that after their meetings this week they will do want to do so," he said.
Mr Varadkar has refused to say exactly what action the Government will take against banks if they don't move to end the controversy.
Potential measures include an increase in taxation or an increased bank levy.
Mr Varadkar said said: "People have heard our language, they want to see action and as a Government we want to see action from the banks and if we don't see action there will be action from the Government. "
Sources told the Irish Independent the vast majority of banks were expected to agree to a demand to begin compensating customers before the end of the year.
However, it is understood one bank is showing resistance to the Government’s intervention.
“There seems to be movement with all of them except one but we’ll see what the meetings bring. If they don’t co-operate, then we will insist on enforcement action immediately,” said a source familiar with the process.
The source pointed to the case of Springboard Mortgages which was last year fined €4.5m for overcharging customers for their tracker mortgages.
The lender agreed to pay the penalty, which had been imposed for breaches under the Central Bank’s consumer protection codes.
“The reality is enforcement isn’t about the fine. It’s about reputational damage for the bank,” a source said.
At least 20,000 customers are believed to have been wrongly denied a tracker mortgage in that they paid thousands of euro more in interest than they should have.