Tuesday 24 April 2018

Central Bank found 'zero' tracker cases

Minister reveals how Regulator had denied any evidence of scandal in letter - three years ago

JIM DALY: Wrote to Central Bank as scandal was unfolding
JIM DALY: Wrote to Central Bank as scandal was unfolding
Philip Ryan

Philip Ryan

The Central Bank claimed there were "zero" examples of bank customers in arrears being wrongly switched from tracker mortgages to less favourable interest rates when asked by a Government TD three years ago.

Minister for Older People Jim Daly wrote to the Central Bank and met senior officials after he was made aware of the unfolding tracker mortgage scandal in 2014.

Mr Daly, who was a backbench Government TD at the time, outlined an example of a bank customer who was being forced off a tracker mortgage rate by a lender.

It has since emerged that there are at least 14,000 bank customers - and possibly as many as 30,000 - who will have to be compensated after they were wrongly taken off tracker rates.

Mr Daly urged the Central Bank to investigate the country's banks and establish if they were wrongly forcing customers off more favourable tracker-rate mortgages so as to increase profits.

However, the Cork South West TD was told by then Governor of the Central Bank Patrick Honohan that there was no evidence to suggest banks were engaged in the practice which has caused public outrage in recent weeks.

"I note the tone and exasperation in your letter but let me assure you that the Central Bank is not attempting to hide from you any information that we have in our possession," Mr Honohan said.

"We collect masses of data from banks, but our gathering of information relevant to the supervision of lenders does not involve targeted and systematic collecting of data in the specific way your question pre-supposes."

Mr Honohan said he understood that Mr Daly had a "lengthy telephone conversation" with the Central Bank's "most senior authority" on mortgage rates, Bernard Sheridan.

The former governor said Mr Sheridan told the TD that the Central Bank "does not have any evidence to suggest lenders are currently offering alternative repayment arrangements from their tracker rate to a more unfavourable rate during the lifetime of the mortgage".

"In other words, for this - very relevant - definition of the concept that he understands you have in mind, our estimate of the number is zero," Mr Honohan added.

Last night, the Central Bank said Mr Daly's concerns related to borrowers in arrears and the Regulator's response focused on a "sub-set of tracker mortgage borrowers".

"In that context, the Central Bank is currently undertaking a system-wide examination of tracker mortgage related issues, covering, among other things, transparency of communications with and contractual rights of tracker mortgage borrowers. The scope of the examination tends to all mortgage borrowers, including borrowers in arrears," it said.

Meanwhile, Oireachtas Finance Committee chairman John McGuinness has said he is being "stonewalled" by the European Central Bank (ECB) after he called on officials to appear at an Oireachtas hearing.

He has twice written to the ECB asking for officials to appear before his committee to discuss what they knew about the tracker mortgage scandal.

"I have asked them to appear before the Finance Committee because Central Bank governor Philip Lane told us the ECB has a role in oversight over the main pillar banks," Mr McGuinness said.

"I think it is a terrible reflection on the manner of how the Central Bank and European Central Bank do their business when the citizen always comes second to all of the institutions.

"They are refusing to face the realisation that the game is up, the game is over and the banks better comply. The ECB was very quick to come here and protect the pillar banks but they are not now coming here to protect the customers."

Sunday Independent

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