The costs of a record €21m fine the Central Bank imposed on Permanent TSB for its part in the industry-wide tracker mortgage probe should not be passed onto customers in higher loan costs and fees, the financial adviser who did the most to uncover the scandal has urged.
Padraic Kissane, who started advocating on behalf of aggrieved tracker mortgage clients over a decade ago, and who was appointed as a consumer advocate to the new Irish Banking Culture Board, said the regulator should do all in its power to oversee “whatever method” it takes to ensure Irish bank customers do not end up paying for the behaviour of the mortgage lenders in overcharging tracker home loans.
The elevated level of the fine reflected “the distressing and, in some instances, devastating consequences” of PTSB’s actions on its customers, the Central Bank said.
The PTSB was the first bank to enter the Central Bank’s enforcement order process.
Investigations into the behaviour of the banks across the industry had uncovered that customers lost their homes after banks ignored or aggressively pursued customers.
The other main banks involved in the scandal are AIB, Bank of Ireland, KBC Bank, as well as their subsidiaries. PTSB was the first to be fined, and other lenders are also likely to face significant fines.
The full cost of the scandal across the banking industry is estimated to run out at €1bn.
The bill includes compensation and redress to customers, potential fines, and the legal and costs of the hundreds of banking staff involved in the investigations over many years.
But Mr Kissane revealed he has made representations to the Central Bank to develop a system to ensure the costs of the scandal do not fall on other customers of the banks.
He told the Irish Examiner it was a concern that he had passed on to the Central Bank for it to oversee “whatever method” that can be put in place to save bank customers from picking up the bill.
He said the €21m fine would “ring hollow” for the aggrieved tracker customers who settled with the banks for only small amounts or whose appeals had failed.
And it was unrealistic to expect ordinary customers who were short-changed to go to the courts where they would face the full force of the “lawyered-up” banks.
“The first thing that will happen is that customers who were not properly compensated — especially people who have lost their homes — will ring hollow. [The €21m fine] is an acknowledgment of the wrong,” Mr Kissane said.
“One which I have in mind is going to look at the €21m decision to the coffers of the Central Bank and conclude ‘I got nothing’,” he said.
“The consequences of this are profound and sometimes life-lasting and life-altering,” Mr Kissane said, noting that people have lost their homes across all banks because of the scandal.
All of the banks are in line for fines, he said, including AIB, Bank of Ireland, KBC, and Ulster and the banks’ subsidiaries.
Brokers Ireland, whose members sell mortgages for banks, said that the Central Bank’s fine will likely mean that customers feel “the real pain” through higher costs.