11 institutions are liable to penalty of €10m each for tracker-mortgage crisis

The Central Bank could impose €10m worth of fines on each bank guilty of ripping off 20,000 victims of the tracker mortgage scandal if they fail to immediately address what happened.

Finance Minister Paschal Donohoe said the regulator may impose fines that are potentially double the €4.5m sanctioned against Permanent TSB’s Springboard Mortgages last year.

Eleven institutions may be fined if banks do nothing to resolve the crisis.

Last night, the Government denied Fianna Fáil claims that it had put the value of its bank shares before the needs of the 20,000 victims by failing to immediately take on the banks. Mr Donohoe said further action is likely.

Asked about the scandal, on Newstalk radio’s On The Record

with Chris Donoghue, the finance minister said individual banks could still be held to account and hit with multi-million euro fines.

“That could happen yet,” he said. “The Central Bank may well reach a conclusion for a particular bank, as they did recently in relation to Spingboard.”

He also said banks could be hit with similar fines to the €4.5m imposed on the private firm.

Last November, Springboard Mortgages, which is a unit of Permanent TSB, was fined €4.5m by the Central Bank, for overcharging customers for their tracker mortgages.

The move, which was taken under the Central Bank’s consumer-protection codes, made Springboard the first such lender to be sanctioned.

The €4.5m fine was imposed under pre-2013 laws, which limited any financial sanctions to €5m.

However, under new laws, implemented in 2013, the amount has been doubled to €10m.

Since the Springboard Mortgages fine was announced last November, the Central Bank has been continuing to examine the situation — with a full report due in the coming weeks.

This is likely to recommend further fines for five firms: Springboard Mortgages, Permanent TSB, Ulster Bank, and two which remain unidentified, and up to six other institutions.

Because of the new law, and the number of banks involved, the fines could exceed €100m. This is in addition to “provisions” set aside by banks, which reach into the hundreds of millions of euro, for fines, legal expenses, court cases, and other matters.

However, the exact figure for the sanctions is unclear, because some of the tracker-mortgage scandal issues pre-date 2013 and, as such, can only be prosecuted under the old €5m limit law and not the new €10m ceiling.

Meanwhile, Mr Donohoe and junior finance minister Michael D’Arcy have rejected Fianna Fáil criticism that they put the Government’s bank share-prices before the needs of victims.

During a Saturday interview on RTE Radio’s Marian Finucane

show, Mr Donohoe said that protecting the €11bn in bank shares held by the Government was a factor in the response to the crisis.

Fianna Fáil’s spokesman on finance, Michael McGrath, and spokesman on communications, Timmy Dooley, labelled the claim proof that the Government is conflicted on the issue, with Mr Dooley telling RTE’s The Week in Politics that Fine Gael is “still playing footsie with the banks”.

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