Tracker scandal: When will people get their money back?

"Show me the money," Matthew Elderfield once famously challenged Sean Quinn, when the former financial regulator asked whether the businessman had the cash to plug a hole in his insurance company.

In more polite language, the Minister for Finance and the Central Bank of Ireland are now saying the same to the banks about the tracker scandal. Wronged mortgage customers need to get their money back quickly.

There is a long way to go, as the Government implicitly conceded on Wednesday, as it will be the end of the year before we even know for sure how many people are affected. It seems clear that the total will rise over 20,000.

The first real test will be how quickly the 13,000 consumers already identified get their money and compensation. There is reason for some optimism that some, if not all, will get their money before Christmas. But in some cases, apparently – notably that of Ulster Bank – a simple inability to process the cases quickly will cause a delay.

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Fierce argument

Deciding how many thousands more are due compensation will be much trickier. This has been the cause of fierce argument between some banks and the Central Bank. Will the political and regulatory pressure now force the banks to give way? A judgment will have to be made by mid-December about whether sufficient progress has been made.

By then Philip Lane, the governor of the Central Bank, is due to report to the Minister for Finance. If not enough is being done Paschal Donohoe has promised to take further action, via taxation, levies or the State's position as a shareholder. It is a threat that the Minister hopes he does not need to use.

Although the banks now promising to fall into line, Lane said on Wednesday that, “given some lenders’ past behaviour, the Central Bank is under no illusion that this will require continued and concerted pressure”.

Damaged relationships

This shows the damage to the relationships between the Central Bank and the banks. The Central Bank went as far as saying that banks should be trusted but that this was “an expectation that certain banks are far from fulfilling”. The Minister has asked the Central Bank for steps to ensure the industry puts customers first, but what will happen as a result of this is anyone’s guess.

As Donohoe said, the banks will now be judged on their deeds rather than their words. He also said he does not want to jeopardise any enforcement actions by the Central Bank or any future criminal prosecutions.

Whether any criminal investigations will take place is very much open to question. As in many bank scandals of the past, nobody has even lost their job over this one, and we have no clue who made the decision to deprive people of their trackers.

Traction over AIB

Will the banks now sort this out? A big row is still likely over which customers qualify. In some cases this is clear cut, but in others the banks have clearly felt they have legal advice in their favour. Still, the Government has traction over AIB, in which it is by far the biggest shareholder.

Bank of Ireland’s new chief executive, Francesca McDonagh, appears to have made a decision to sort this out; she put her name to a strong statement that appeared to indicate a change of approach at the bank. No doubt the Minister’s threat to become an awkward shareholder was one reason for this.

There was talk in official circles about a “Pauline conversion” at some of the banks over the past few days, but also caution. All sides knew that the fuss of the past week demanded a response. The banks know that the Government and the Central Bank can make life awkward. But tough talking still lies ahead to identify how many more customers fall into the net. Some progress has been made, and time bought, but this is far from over.