Heads of the country’s five main banks have told the Department of Finance they will establish an Irish Banking Standards Board to “start the process of rebuilding trust and confidence in the industry” following the tracker mortgage scandal, writes Pádraig Hoare.
The five chief executives of the main retail banks — AIB Bank of Ireland, KBC, Permanent TSB and Ulster Bank — said the new board will be broadly modelled on the Banking Standards Board which operates in the UK.
Finance Minister Paschal Donohoe welcomed the move after the ‘disgraceful’ behaviour of the banks following the tracker mortgage scandal, which has seen dozens lose their homes.
He said: “In October, I made it clear that the banks’ behaviour in relation to tracker mortgages was disgraceful. Following on from the recent publication of the Central Bank’s update on the tracker mortgage examination, I welcome this initiative by the current leaders of the banking industry and look forward to receiving more detail when the chairperson and board selection process is formally launched by the five CEOs of our main retail banks in early February.”
It is proposed that the board will be made up of expert people from across civil society, all of whom are committed to and focused on enhancing competence, culture, reputation and trust across the Irish banking industry, the department said.
The board will be chaired by an independent non-banking individual who has the “personal respect, credibility and trust of citizens”, the department added.
The initial step will be the establishment of a selection panel to hire the chairman, CEO and board. The cost and time involved in establishing this new entity should not be underestimated, the department warned.
The final bill for the tracker mortgage scandal could top €1bn and affect up to 40,000 customers, according to financial consultant and consumer advocate Pádraic Kissane, who helped expose the scandal.
The Central Bank last month revealed a dramatic increase by 13,600 to 33,700 in the number of cases it has forced lenders to acknowledge.
Compensation and redress has to date reached almost €300m.