Trackers: Banks need to ‘fess up and fix’ scandal

The Taoiseach has warned the banks they will face tougher new laws should they fail to quickly and adequately compensate tracker mortgage customers.

Leo Varadkar said the failure of the banks to properly address the plight of 13,000 plus customers has “undermined” the State’s rebuilding of the banking system.

Speaking to the Irish Examiner, Mr Varadkar said: “The slow response of lenders has undermined the Government’s efforts to restore trust in the banking system. They need to fess up and fix it. We do not rule out new regulations and new taxes if we don’t see a step change in their response.”

The threat to strengthen the powers of the Central Bank and to sanction the banks is the strongest language to date from the Government in relation to this scandal. The comments come as Fianna Fáil demands the Central Bank examine minutes of bank board meetings and emails to see who was responsible for the scandal.

Mr Varadkar said the Government has “lost patience” with the banks over their maltreatment of 13,000 tracker mortgage customers who were adversely affected, in what Labour leader Brendan Howlin called a “gross betrayal”.

Mr Varadkar said: “We do need a clear timeline for redress and compensation. The two banks who have been found wanting are likely to be named by end of October.

“The Government believes the behaviour of the banks in regard to removing people from tracker mortgages was scandalous,” he said.

Finance Minister Paschal Donohoe is to haul bank CEOs into his office next week to “admonish” them over their failure to resolve the plight of those affected.

“The minister for finance has arranged to meet the CEOs of the main banks, Bank of Ireland, AIB, Ulster Bank, PTSB and KBC, on Monday and Wednesday next week, and he will admonish them for their conduct on behalf of the Government,” he said.

Mr Varadkar and Mr Donohoe held several conversations throughout Tuesday on the tracker mortgage scandal and while Mr Donohoe was due to meet the banks, sources have said the “context has changed significantly” given the Central Bank’s report which confirmed the 13,000 cases.

The Taoiseach was speaking as the governor of the Central Bank Philip Lane is to tell the Oireachtas finance committee today that the tracker scandal has pushed his powers “to their limit”.

In his address, seen by the Irish Examiner, he will say he believes the number of those who have lost homes and properties will increase from the 23 homes and 79 buy-to-let properties already confirmed.

However, Mr Lane will stress the bank has been pushed to its limit by the lack of co-operation and progress made by lenders in compensating and amending tracker cases with borrowers.

The failure of the Central Bank to take a tougher stance on the banks has come into focus as the Irish Examiner has also obtained copies of 2014 correspondence sent by former Central Bank governor Patrick Honohan to then Fine Gael backbencher now minister Jim Daly which said the bank felt the amount of customers affected was “zero”.

Separate correspondence sent by Mr Lane to Mr Daly this year said the problem was limited to “a small number of isolated cases”.

Fianna Fáil finance spokesman Michael McGrath said the political will to address the plight of the mortgage customers is there and should be capitalised upon. Speaking to the Irish Examiner, he said: “The Government has finally woken up here to the seriousness of the situation in that thousands of customers remain to be repaid. The Central Bank is being faced down and it is unacceptable.”

He added: “There must be accountability, there is a need to examine if any additional powers are needed. The political will is there.”