Banks facing fines for tracker mortgage scandal

Bank chiefs are facing the threat of tougher levies or even fines if they fail to set out how and when customers ripped off by the tracker mortgage scandal will be properly repaid and compensated.

Mortgage campaigner David Hall

The five main banks will be asked to set out a clear timeline for compensating borrowers and exactly how many must be repaid, when they meet the finance minister this week.

A rise in the bank levy, increased taxation, penalty fines, and enhanced consumer protection were flagged at the weekend by Government figures. Finance Minister Paschal Donohoe will today meet with the CEOs and chairmen of KBC, Bank of Ireland, and Permanent TSB, while Ulster Bank and AIB will also be quizzed at Government Buildings over the next two days.

This evening, the Cabinet will also discuss responses from the banks and options to resolve the tracker mortgage scandal.

Financial experts are predicting that as many as 30,000 people could have been wrongly removed from their tracker mortgages and moved onto a higher rate.

Mortgage campaigner David Hall told the Irish Examiner that, despite the Government promises, borrowers must be protected after what was “stolen from them in the tracker scandal”.

The pressure to act will also intensify this week as Fianna Fáil moves a Dáil motion, demanding an inquiry and penalties.

Legislation to allow for class action suits should also be introduced so borrowers can sue the banks, Fianna Fáil says.

The prospect of fines for banks failing to adequately compensate borrowers is being strongly considered.

“If they act the bollix, we can get the money off them [for those customers] by doing it this way,” one minister told the Irish Examiner.

The minister pointed to a recent €4.5m fine for PTSB over its subprime unit Springboard Mortgages, which it sold to Mars Capital in 2014.

The junior rural affairs minister, Seán Kyne, also said this threat should be used with the banks.

“Whatever legislation is needed to fine the banks should be prepared now,” he said.

“And I think that threat needs to be made by Minister Donohoe to the banks, and have that rushed through the Dáil, as it were, before Christmas if needed.”

Junior finance minister Michael D’Arcy confirmed the prospect of increasing the bank levy or taxation on banks was “on the table”. The current levy will bring in €750m by 2021.

Mr D’Arcy also suggested the consumer protection role of the Central Bank may be removed and transferred to a stand-alone authority.

Taoiseach Leo Varadkar left open the option of financial penalties for the banks. At a Fine Gael event on Saturday, he said: “We are very frustrated at the lack of progress to date and we are certainly not ruling out further sanction, further regulation, or additional taxation on the banks.”

Government sources said that between now and Wednesday, the six lenders would be asked for exact figures and a timeline on compensating customers.

If this is deemed unsatisfactory, sanctions, in combination with fresh legislation, will then be considered.

However, Sinn Féin’s Pearse Doherty said empty promises were a “slap in the face” for customers, some of whom had lost homes or families, or had emigrated.

“Banks don’t do morals,” said Mr Doherty, adding six of the lenders involved had not returned a cent to customers.

Meanwhile, an advocacy group representing people who lost homes as a result of the tracker scandal said it will take “aggressive action” against the banks.

The Irish Mortgage Holders Organisation wrote to banks last week asking them not to sell any of the homes repossessed as a direct result of the mortgage scandal. If the banks do not reply, it is understood the IMHO will seek a High Court injunction against them selling on these properties.

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