The Central Bank revealed the Garda involvement as Taoiseach Leo Varadkar threatened banks with new laws, taxes, and penalties if they fail to compensate those affected within weeks.
Speaking before Finance Minister Paschal Donohoe holds crunch meetings with the banks on Monday and Wednesday, Central Bank officials said they have been co-operating with gardaí.
At an appearance at the Dáil finance committee, which heard chairman and Fianna Fáil TD John McGuinness describe what has happened as “grand theft from thousands of people”, Central Bank financial conduct official Derville Rowland said the scandal has already been discussed twice with gardaí.
Ms Rowland — who also said banks have informally threatened legal action if any measures are taken against them — told TDs she “could not say” if a criminal probe would be launched into the controversy, which occurred when at least 20,000 tracker mortgage holders were incorrectly moved onto more expensive loans.
However, she confirmed the Central Bank has also been in contact with the Competition and Consumer Protection Commission, and that further action is likely.
The view was repeated in the Dáil by Education Minister Richard Bruton, who, speaking on behalf of Government, said gardaí may be asked to get involved.
During the latest Leader’s Questions debate, Mr Bruton said that the Coalition will “ruthlessly pursue” banks warning.
“Given the appalling trauma in our economy and our society caused by bad bank lending and poor regulation, there is now an absolute obligation on banks to fulfill their responsibilities to their clients,” said Mr Bruton.
“The Central Bank has made clear that it is engaging with other statutory bodies, including the Garda Síochána, so there is no flinching from pursuing this.”
Mr Varadkar warned banks to resolve the issue, saying that they will be hit with new laws, penalties, taxes, and bank levy hikes if they do not compensate customers immediately.
Repeating a threat first made in yesterday’s Irish Examiner, Mr Varadkar said he wants banks to “get on with it and sort things out”.
“We’ll see what happens next week [when banks meet with Mr Donohoe],” he said.
“I’m certainly open to new laws and new regulations, and additional taxation.
“The banks have it in their power to sort this out within a matter of months.
“Legislation and new sanctions would take longer and I really think the banks have prevaricated and dragged their heels for far too long now.”
While the Government is taking a tough stance on the issue, it is understood the Coalition is still of the view the matter could be resolved by banks previously bailed out, compensating victims.
However, it is unclear if this will take place, with the Central Bank confirming banks have unofficially threatened legal action if any moves are made against them by the financial watchdog.
Fianna Fáil finance spokesperson Michael McGrath said the issue is “one of the greatest consumer rip-offs in state history”.
His party colleague, public expenditure spokesperson Dara Calleary, went further, telling the Dáil that the Government risks allowing banks to “slither and slide” away if they do not act to address the scandal now.
The view was repeated by Labour leader Brendan Howlin and Social Democrats TD Catherine Murphy.
Noting the “human carnage” involved, Mr McGuinness said: “They [banks] stole money from people and it is still not repaid. It is a question of grand theft from thousands of people. It’s cartel behaviour.”