There is still a long way to go before the tracker scandal is finally sorted out. That was one of the key messages from the flurry of statements on Wednesday. The pressure being applied by Minister for Finance Paschal Donohoe and the Central Bank has certainly led to some notable movement, but a lot of work remains to be done. Most of those already identified as being affected will be repaid by Christmas, it now appears, but many thousands of further cases remain to be agreed.
It is clear that the Central Bank, in particular, remains sceptical about the real commitment of all the banks to finally sort this out. In a noteworthy comment, Central Bank governor Philip Lane said that given the behaviour of the banks so far, it will require "continued and concerted pressure" from the regulator to get it all done.
This is a poor reflection on the commitment of at least some bankers to do the right thing by their customers. As the Minister for Finance said, “the legalistic approach taken by some banks to avoid doing the right thing is simply unacceptable”. He was also correct to observe that the banks would now be judged on their actions, rather than their words.
There does appear to be some movement now by the banks and an acknowledgement that this has to be sorted. This is overdue. It is clear that the industry tried to hustle as many people as possible on to standard variable mortgages. Whatever the precise legalities, customers must now be given the benefit of the doubt.
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A number of the major banks have been fighting this every step of the way. They have been objecting, arguing and even, it appears, threatening the regulator with legal action. Getting clarity for customers is taking too long and in some cases this is taking a significant toll on those involved. It is a disgraceful episode.
Banks must also pay the price. Significant fines are now inevitable and appropriate. Generous compensation must be offered, particularly given the time delay. As referred to by the Minister, in some cases prosecutions may be called for. In some cases banks appear to have interpreted contracts in their own favour – but in others the wrongdoing appears to have been more clear-cut.
Both the Minister and the Central Bank need to keep pushing. The Government has options in relation to taxation, levies and its ownership of part of the sector, if the banks do not fall into line. The Central Bank has enforcement powers and also other options it can consider.
The original decisions to deprive people of tracker mortgages was a travesty, but the banks have made this a lot worse by the way they have responded. They need to be kept under intense pressure to sort it out. The culture of our banking sector remains deeply flawed.