Sir, – The tracker mortgage scandal has raised embarrassing questions on the efficacy of Irish politics.
It also raises questions on the adequacy of European Central Bank (ECB) regulation of Irish banks.
Since 2014, the main euro-area banks are supervised directly from Frankfurt, in relation to prudential rules and capital requirements, under the Single Supervisory Mechanism. Euro-area states have granted key banking regulation sovereignty to the ECB, including the power to grant and withdraw banking licences. Part of the justification was to avoid the risk of regulatory capture at national level.
The ECB undertakes to safeguard financial stability in the European Union, and to use its supervisory powers in the most effective and proportionate way.
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In Ireland, the ECB directly supervised entities are Allied Irish Banks, Citibank, Permanent TSB, Bank of Ireland and Ulster Bank.
However, regulation of consumer protection remains with the national supervisory authority, the Central Bank of Ireland. The Central Bank webpage on this role reveals little evidence of any enforcement action.
But it is not a question of lack of powers.
For instance, the Central Bank is authorised to ensure compliance with EU regulations (since 1993) on unfair contract terms in mortgages, including seeking a court order for a declaration that a term in general use is unfair (or an injunction) to prevent its use.
Even core terms, such as interest charges, must be grammatically intelligible to the consumer. The contract should be sufficiently transparent so that the consumer can evaluate, on the basis of clear, intelligible criteria, the economic consequences for him or her.
Where there is a doubt about the meaning of a term, the interpretation most favourable to the consumer must prevail.
The Irish legal system is increasing viewed as protecting financial corporations, their assets and securities, rather than citizens or consumers. Home repossession orders have been granted (often undefended) where the underlying mortgage contained unfair contract terms, and lenders breached core terms.
With over 700,000 homeloan mortgages and a dozen lenders, the framework of EU consumer law is most relevant.
But this is not just a consumer issue. ECB-regulated lenders are selling loan books containing mortgages tainted with illegality, and in some cases are not meeting ECB governance standards.
Would “fit and proper” persons managing supervised entities have behaved in the ways described by the Central Bank to the Oireachtas Finance Committee?
All EU institutions and agencies have to respect the rights and observe the principles of the EU Charter of Fundamental Rights, applying these within their activities.
The Single Supervisory Mechanism regulation specifically recognises this obligation, although the ECB interprets it somewhat narrowly.
Of course, Article 7 of the EU Charter states “everyone has the right to respect for his or her private and family life, home and communications”.
Now there is an idea. – Yours, etc,
Dr PADRAIC KENNA,
Centre for Housing Law,
Rights and Policy,
School of Law,
NUI Galway.
Sir, – Banks, institutions, banking cultures, systems failures – all of these words are used to obscure the reality that individuals, people, men and women, made decisions that were designed to profit the banks and impoverish their customers.
Is it too much to hope that for once in this country, when a wealthy person of influence is found to have acted immorally or unethically or illegally, that he or she – and not the banks or institutions for which he or she worked – will suffer some punishment as a result? – Yours, etc,
BRIAN O’SHEA,
Beara,
Co Cork.
Sir, – Many of your letter-writers (October 21st) reflect a tired resignation at the expectation that no punishment of consequence will befall the bankers responsible for the latest scam. They question the lack of due diligence of both the Central Bank and the Government, but must realise that this goes further than these shores. These repeated banking scandals are but a symptom of a malaise that is global and for which governments are impotent, having relinquished any control of global finance years ago. The current manifestation of banking is one which is set up to serve faceless fund managers and will continue to facilitate the transfer of wealth from the many to the few. They have set up a system of economic dependency such that no political party of the right or centre-right would dare promote a policy of increased regulation for fear of losing their patrons. This foolproof system ensures that no matter what risks are taken to maximise profits, all consequence is taken by the general public in the socialisation of private debt. We in Ireland will live with the consequences of this ongoing scam for a long time. – Yours, etc,
BARRY WALSH,
Blackrock,
Cork.
Sir, – How can the same entity, the Central Bank, seek to ensure the solvency of our banking system, which required a return to profitability after the banking crash, and at the same time protect the bank customers? The fundamental responsibility of the Central Bank is the solvency of our banking system, and as we can see the bank customer comes second! – Yours, etc,
JAMES DEENY,
Rathgar,
Dublin 6.
A chara, – In recent years, sporting organisations have come under pressure not to accept advertising revenue from companies in the tobacco and alcohol sectors. Such products were deemed incompatible with the healthy lifestyle being promoted by sporting bodies.
Maybe it is time for the same sporting organisations to refuse advertising from our banking industry.
Cheating is unacceptable in sport, and if sport is to advocate for fair participation, it should set an example by refusing to go into partnership with banks who have clearly cheated their customers. If our Government and regulatory bodies are unwilling or unable to reprimand the banks, then maybe our sporting organisations can set the agenda in this regard. – Is mise,
JOHN KELLY,
Bennekerry,
Co Carlow.
Sir, – Perhaps banking is too important a service to leave in the hands of the private sector. – Yours, etc,
PADDY MEYLER,
Greystones,
Co Wicklow.
Sir, – It seems appropriate to say to bankers what WB Yeats famously once said to an Abbey audience: “You have disgraced yourselves again.” – Yours, etc,
PATRICK SEMPLE,
Monkstown,
Co Dublin.
Sir, – How can “moral suasion” change the actions of those who have lost their moral compass?
Banks are not the problem, bankers are, yet they seem untouchable. Even when fines are levied on a bank, the public, as customer or shareholder, foot the bill. The bankers, whatever the circumstances, collect their good salaries, bonuses and pensions. No hazard here, so why change?
Until the authorities hold the bankers personally responsible for their actions and take the necessary enforcement action against them, the cycle of bad practice will continue.
In other professions, fitness to practice is assessed and, if found to be deficient, permission, is withdrawn. Why should bankers be any different? – Yours, etc,
BRIAN LYNCH,
Sutton,
Dublin 13.
Sir, – We miss the point of the tracker-mortgage scam if we look first for legislative responses. The banks’ failure is one of corporate governance. Their boards are handsomely paid to ensure that their near-monopoly powers over people’s personal finances are exercised responsibly, ethically and within the law.
The people to hold to account for egregious failure are the directors. Their fees should be forfeit for the whole period of the failure. If they failed to act, they should be disqualified from holding further directorship.
Driving one’s customers into insolvency is as serious as allowing one’s own business to renege on its debts. Enforce good governance from the top. – Yours, etc,
JEREMY HARRISON,
Rathconrath,
Co Westmeath.