The Central Bank needs to “have a big mirror to look into” surrounding its own role in the tracker mortgage scandal, as it compiles a report on the culture of banks later this year, writes Pádraig Hoare.
Governor Philip Lane, head of enforcement Derville Rowland, deputy governor Ed Sibley, and head of consumer protection Helena Mitchell were appearing before the Oireachtas finance committee to update TDs and senators about the tracker mortgage investigation, when its own role in the scandal was scrutinised.
Committee chairman John McGuinness said the Central Bank had been informed of issues surrounding tracker mortgages since 2008.
He said the culture of banks, where profit at the expense of the customer was “as embedded as ever” in the culture of banks, and that the watchdog had a responsibility to do more.
“I will not judge you on your language but the action you are prepared to take on behalf of the customers robbed by the banks, whose lives have been devastated,” said Mr McGuinness.
“You are coming some of the way, and whether it was this committee or someone who dragged you to this point, you’re not there yet as a regulator.”
Mr McGuinness said the response of banks to the tracker scandal was indicative of an industry reluctant to change.
“What you are seeing is not a culture change, what you are seeing is a combined effort by the banks to provide the appropriate smokescreen until they can get beyond this,” he said.
Mr McGuinness blasted vulture funds for “educating the next generation of bankers” in how to mistreat customers, “in terms of their aggressive approach, in terms of making the customers jump every time they ask, in terms of disimproving the mental health and wellbeing of people”.
He said: “Their attitude is shocking. No country, parliament, or society should accept it.”
Mr Lane said the tracker issue was a “watershed moment” for banks, while Ms Rowland said the watchdog was “determined to hold their feet to the fire on it”.
The Central Bank “had done a huge amount of fighting” with lenders to make them reach minimum levels of compensation for people who had lost their homes.
Other members of the committee who have been critical of the Central Bank in past hearings, including Fianna Fáil’s Michael McGrath and Sinn Féin’s Pearse Doherty, praised the watchdog for what they called a tougher stance in recent months.
Mr Doherty said faith was being restored in the Central Bank, adding: “For a long time, people didn’t believe anyone was on their side.”
Ulster Bank came under fire from committee members for being slower than the other four major lenders in paying redress — the money incorrectly charged — and compensation for the scandal, which happened when homeowners were wrongly put on more expensive loans.
Mr Doherty said Ulster Bank was an “outlier” compared to other banks, and that their slow progress was “appalling”.
Mr Lane said Ulster Bank was “more constrained” because of limits in its own system, with Ms Rowland saying the watchdog could only make lenders “do what they are capable of” and that they “pushed and pushed” lenders to pay out as fast as possible.
The 33,700 affected will rise but not hugely, said Mr Lane, and the scandal would cost the banks €900m.