Michael Noonan: Banks should be punished

Banks should be punished for their “disgraceful” treatment of tracker mortgage customers, says Finance Minister Michael Noonan.

He told the Dáil many borrowers had incurred “considerable loss”, with some losing their homes as a result of the tracker mortgage scandal.

Sinn Féin accused banks of “corporate theft” and said that institutions had “deliberately” overcharged around 15,000 mortgage holders.

Around 15 lenders, including Bank of Ireland, AIB, Permanent TSB, and Ulster Bank, moved customers off tracker rates on to more expensive loans.

Mr Noonan said: “The existing powers of the Central Bank are strong and should be used to punish wrong doing.”

While Mr Noonan told the Dáil while he agreed with the sentiment of the motion on the tracker mortgage scandal tabled by Sinn Féin, the Government would be tabling their own motion.

He said: “The lenders — who caused this harm to impacted tracker mortgage borrowers in the first instance by their incorrect actions — have the primary responsibility for rectifying the problem.”

Mr Noonan said the Central Bank’s industry-wide examination should be completed “with appropriate redress and compensation to impacted customers, as soon as possible”.

Fianna Fáil’s Michael McGrath asked Mr Noonan to “intervene” to make sure mortgage holders are put on the right rate immediately.

He said the Central Bank is not “in the Champions League” when it comes to consumer protection and that would have to be examined.

Sinn Féin’s Pearse Doherty said families had lost their homes and parents have been unable to afford to send children to college. People were made bankrupt while others suffered mental breakdowns as a result of the financial strain the increased mortgage rates caused, he said.

“There are certain things that will never be able to compensate, there are certain things that you will never be able to give back to these families, but what [the banks] need to do is they need to inform everybody that they are going to make right and then they need to restore them onto the right rates,” said Mr Doherty.

The Sinn Féin motion, to be voted on tomorrow, calls for a full redress scheme that works for victims within a strict deadline and for an overhaul of white collar crime so the bankers responsible can be held to account.

The controversy came to light two years ago when the State-controlled Permanent TSB set aside tens of millions in its accounts for a potential compensation scheme ahead of a share sale.

It emerged that customers who originally took out tracker mortgages were being overcharged by around 15 banks.

“This is the biggest financial scandal that we have seen in recent times,” said Mr Doherty.