Former junior finance minister Brian Hayes has asked the EU to investigate if Irish banks operated a “cartel” in the tracker mortgage scandal and if they collaborated in ripping off thousands of customers.
The Fine Gael MEP has also asked the ECB if offending banks will be fined and whether the whole controversy threatens the stability of the banking sector here.
It comes as the Dáil heard further calls yesterday for gardaí to intervene and investigate how thousands of borrowers were wrongly moved off low-cost loans.
Mr Hayes has contacted the competition section of the EU under commissioner Margrethe Vestager, who has the power to probe any breaches of EU competition law, including cartel activity.
“The tracker mortgage scandal has rocked Ireland and it is important that we have all competent authorities, in Europe and in Ireland, investigating the shocking actions of banks,” he said.
“While we still don’t have all the facts in the tracker mortgage scandal, the clear indications are that there was collaboration between the banks in order to intentionally deny customers their correct tracker mortgage rate. If this proves to be the case, this would be, in very simple terms, a cartel.”
Mr Hayes believes the European Commission has a raft of information to give it grounds for investigation.
He said commission authorities could conduct dawn raids on premises; examine all records of a business; seal the premises and records during an inspection; and question members of staff.
Mr Hayes also pointed out that there is precedent for such an intervention. In June 2002, the commission fined Austrian banks in the “Lombard Club” cartel case, concluding that they developed a highly institutionalised price-fixing scheme with a view to fixing deposit, lending, and rates.
Mr Hayes claimed the Central Bank here could only investigate the mortgage scandal, now believed to have affected up to 30,000 customers, over regulatory and consumer protection.
He has also raised the scandal with the ECB. In a letter to EU banking authorities who oversee the Central Bank here, he asks how the ECB will respond: “Does the ECB consider that any systemic risks could arise in the Irish banking system because of this issue? Does the ECB have a remit to impose penalties on Irish banks due to these failings to apply the correct tracker mortgage rate to customers?”
Meanwhile, in the Dáil, Fianna Fáil’s Jim O’Callaghan questioned the decision to give banks further time to resolve thousands of more cases, without immediate penalties. He said he has “little faith” banks would deal with the issue by next June — a deadline agreed to by one lender.
The Government’s attempt to frighten or give vague threats to the banks is not working, he said.
Labour’s Brendan Howlin said the banks had “systematically defrauded” people through cartel-like behaviour.
Tánaiste Frances Fitzgerald promised that if fraud or criminal action was discovered, it would not be covered up.
Elsewhere, the finance committee has agreed to re-call the banks on the scandal in the new year.
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