Philip Lane: No cap on compo for mortgage customers

Compensation for customers wrongly removed from their tracker mortgages will not be capped, the governor of the Central Bank has said.

Philip Lane has said there is no upper limit to the amount of compensation banks will have to pay customers they wrongly removed from tracker mortgage rates.

Mr Lane was speaking to the media after he met with Finance Minister Paschal Donohoe yesterday.

The surprise meeting took place just before bank chief executives met with the minister to be “admonished” for their behaviour in relation to the tracker scandal.

Following their meeting with Mr Donohoe, Wim Verbraeken, chief executive of KBC Bank Ireland, and Francesca McDonagh, chief executive of Bank of Ireland, said they would consider the discussion with Mr Donohoe before making a full statement.

Mr Verbraeken told reporters after meeting Mr Donohoe: “KBC Bank Ireland can confirm that we had a productive and informative meeting with the minister for finance this morning.

“The minister conveyed the Government’s great concern around the matter to us. We have undertaken to revert to the minister on the matters discussed and we anticipate to be in a position to issue a statement later this week. In agreement with the minister this is all we have to say on the matter.”

As she was exiting, Ms McDonagh said: “We had a meeting with the minister and we listened very carefully to what the Minister had to say and his concerns. We are treating this matter very seriously and we’ll be making a statement in due course”

Executives of both Ulster Bank and AIB are due to meet with Mr Donohoe later this week.

Taoiseach Leo Varadkar said the taxpayer would not have to foot the bill for the compensation of those wrongly moved off tracker mortgages. “The banks have it in their hands to resolve this in a matter of weeks or months if they want to do so. I would hope that after their meetings this week they will do want to do so,” he said.

The Government had threatened a series of actions against the banks if they failed to compensate those affected by Christmas.

Up to 30,000 homeowners have potentially been caught up in the scandal which saw banks forcing people off loss-making tracker mortgages in the post-crash period. Some of those who were overcharged went on to struggle to meet their repayments and some lost their homes through repossession.

Prof Lane said banks have paid out €163m in redress and compensations thus far.

“We think the vast majority of those cases will be paid out before Christmas. However, we continue to press the banks to expand their coverage to make sure that all those affected are included in their schemes. That is the current focus of our work . . . is to make sure yet more included so that all those affected will receive redress and compensation from the banks.”