Central Bank ‘pushed to limits’ trying to force banks to compensate people ripped off from tracker mortgage scandal

The head of the Central Bank says it has been pushed to the “limits” of its powers in trying to force banks to compensate and address people ripped off from the tracker mortgage scandal. 

Governor Philip Lane will say the bank expects more cases to emerge, more homes to be lost, and that two lenders have failed to identify customers impacted by changed rates.

He is set to address the Oireachtas finance committee and update members on the mortgage scandal; last week borrowers who were wrongly charged revealed their pain in battling banks.

Mr Lane will say that the mishandling of tracker mortgages has caused “considerable suffering” for many borrowers. But the regulator has been pushed to its limit trying to force banks to act.

“We have had to repeatedly challenge certain lenders and push to the limits of our powers in order to drive them to identify and remedy affected customers in an appropriate manner.”

This is a reason why the process of correcting cases has taken so long, he says.

He is expected to say the Central Bank “are pushing the limits of our powers to ensure affected customers are remedied appropriately”. In addition, the examination of the mortgage scandal is the largest, most complex and significant conduct review undertaken” on its consumer protection mandate,” committee members will be told.

By the end of September, lenders had identified 13,000 affected accounts. Approximately 60% of these arise as a result of customers not receiving a tracker product, and the balance relates to customers not receiving the correct tracker margin. As the end of last month, lenders had rectified interest rates applied to around 7,700 affected accounts.

While some have lost homes as a result of financial problems from the wrong rates, more cases of property losses are expected to emerge, Mr Lane will say: “To date, lenders have reported that as a result of their failings, loss of ownership has occurred in respect of 23 homes and 79 buy to let properties. As these analyses by lenders continue, we anticipate that more such cases of home and property loss will be identified.”

Two lenders are also resisting orders to identify customers impacted by the wrong charges and have failed to compensate them properly or make redress, it has emerged. Mr Lane will say “the Central Bank is concerned from the assurance work completed to date that two lenders may have failed to identify populations of impacted customers or failed to recognise that certain groups of their customers have been affected by their failures.

“We are of the view that some of these customers have in fact been affected and, accordingly, are entitled to redress and compensation. We have challenged the two lenders on these issues and they will report back to us by end-October.”

Mr Lane will detail how by the end of last month, €120m has been paid in redress and compensation to customers. This is in addition to redress and compensation by Permanent TSB (€36.8m) and Springboard Mortgages Limited (€6.2m) to customers under a separate probe.

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