Donohoe says most affected in tracker scandal to get redress by end of year

Most of the tracker mortgage customers who have already been identified as being affected by the scandal will receive compensation by the end of the year, the Minister for Finance has said.

Paschal Donohoe said other customers who may be affected by the controversy will be identified by the end of the year, with some outstanding cases being addressed by June 2018.

“The majority of affected customers included in the group of already processed cases will receive redress and compensation payments before the end of the year,” he said. “The Central Bank will set deadlines for the identification of further affected customers and deadlines for the payment of redress and compensation for these customers.”

Mr Donohoe said Central Bank governor Philip Lane will provide him with an update in December on cases where disputes are ongoing.

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Tens of thousands of homeowners have potentially been caught up in the scandal, which saw banks wrongly refuse customers access to tracker mortgages after the crash. Some of those who were overcharged went on to struggle to meet their repayments, and some lost their homes through repossession.

The Central Bank has been asked to prepare a report on the culture and behaviour of the banks, and what actions may be taken to protect customers in future.

Mr Donohoe said that when this report is completed, the Government will then decide if any further legislation or regulation is needed to improve accountability in the banks.

The Dublin Central TD was joined at the press conference by Michael D’Arcy, the Minister of State at the Department of Finance and Derek Moran, the secretary of the department.

“Let me be very clear - the Government believes that the behaviour of the banking sector in relation to tracker mortgages was disgraceful,” Mr Donohoe said. This is a scandal. It should never have happened and the Government is determined to ensure that it should be resolved.”

Mr Donohoe said it is clear from his meetings over the past number of days that “that significant cultural issues and challenges in some of the retail banks still exist”.

“Customer interests have not been sufficiently protected or prioritised. This is unacceptable.”

He said that if the Central Bank tells Mr Donohoe that banks are making insufficient progress in addressing the controversy, a number options by way of sanction are available to him.

These include new legislative requirements for stricter reporting for all retail banks: amending tax law in a targeted way and targeted activist actions as a shareholder in three of the banks consistent with the protection of the taxpayers’ investment over the medium term.

Each of the five banks who Mr Donohoe met this week outlined their actions on Wednesday.

AIB said that 4,152 customers had been identified as being impacted at the end of September, with 3,500 already having received redress and compensation. The remaining customers will be paid by the end of the year.

Bank of Ireland has identified 4,300 customers as being impacted. Compensation will begin by November 10th and will be completed by the end of the year.

KBC Bank Ireland says 490 customers have been identified, and the “vast majority of any remaining impacted customers” will be identified by the end of the year.

The majority of KBC customers will be paid by the end of the year, with “more complex cases continuing into 2018”.

Permanent TSB has identified 1,971 customers who have been affected and 82 per cent of these have already been contacted with offers of compensation and redress. The remainder will receive similar offers by the end of the year.

Ulster Bank has told the Minister it has found 3,500 customers who have been affected, and redress and compensation will be made to 1,000 of these by the end of the year.

A further 1,500 will receive redress and compensation by the end of March, with the remainder addressed by the end of June 2018.

‘Criminal investigation’

Earlier, some Independent members of the Government said a criminal investigation is needed into the banks at the centre of the tracker mortgage controversy,.

The Independent Alliance has also said the Government, as a shareholder in some banks, “must bring its power to bear on board appointments and behaviour”.

The Alliance is comprised of Shane Ross, Finian McGrath, Kevin "Boxer" Moran, John Halligan and Seán Canney.

“We believe that what has happened to the more than 20,000 customers of these banks should be the subject of a criminal investigation,” a statement from the group said.

“The allegations of fraud which have been made more than merit a top-level criminal investigation rather than just a Central Bank investigation.

“We must not forget that many people lost their homes due to an inability to repay their mortgage after being taken off tracker rates while others have suffered severe ill-health through the cruel tactics employed by some banks.

“The time for talking is over. The banks were given plenty of notice that this was a problem they had to solve. Now it is obvious that a criminal investigation is needed to get to the bottom of the scandal.”

The Alliance also said the levels of compensation paid should be determined by an independent “body or person”.

“The banking sector in Ireland has gotten away with too much. It was the people of Ireland who kept them afloat during the banking crisis yet all some of those people got in return was seeing their homes ripped from their hands.”