PTSB role on tracker mortgages needs investigation - McGrath

The role played by the Central Bank and Permanent TSB in removing tracker mortgages from some borrowers must be investigated by the Oireachtas Finance Committee, Fianna Fáil's finance spokesman has said.

Michael McGrath issued a statement on Saturday morning in the wake of reports that the Central Bank was warned in 2009, by the then Financial Services Ombudsman, that there were possible issues with the conduct of the entire banking sector in its treatment of borrowers who may have been entitled to tracker mortgage rates.

One year later, the Ombudsman ruled PTSB had acted irregularly in the case of a borrower whose tracker mortgage had been removed.

Over 1,300 PTSB borrowers have subsequently been found to have been wrongly denied the option of moving back to a tracker mortgage, having been on a fixed rate mortgage.

Repossessions

This denial to customers of the option of moving back to a tracker rate has subsequently been found to have been an issue in the repossession of 22 homes.

Mr McGrath said he had written to the Finance Committee earlier this week suggesting a series of hearings be held on the issue.

“Almost 1,400 mortgage customers have been scandalously treated. This arises from Permanent TSB’s failure to inform some customers of the consequences of their decisions to break early from a fixed rate or discounted tracker period, and the failure to inform some other customers of their right to be offered a tracker rate at the end of any fixed rate period.

“This resulted in some customers falling into arrears on their mortgage or even losing their home, while many others overpaid thousands of euro on their mortgage as a result,” he said.

"Revelations in the today's Irish Independent that the Financial Services Ombudsman wrote to the Financial Regulator as far back as 2009 asking that the office investigate whether banks were trying to remove tracker rates from mortgage-holders raise serious questions about the tardiness of the Central Bank in dealing with this vital issue of consumer protection."

Examination ‘vital’

It was “vital” that the entire issue was examined in detail by the Oireachtas Finance Committee, he added.

“Such a probe would include an examination of the origin of this problem, the role of the Central Bank and PTSB in dealing with it, whether it has wider application to customers of other banks, the effectiveness of the redress scheme that has been put in place by PTSB for their customers and other related issues.”