Call for European Central Bank to oversee tracker mortgage compo

The European Central Bank has been urged to return to Ireland to oversee tracker-mortgage compensation plans, as the opposition claims not enough is being done to address the crisis.

Call for European Central Bank to oversee tracker mortgage compo

The intervention request was made to ECB president Mario Draghi by Fianna Fáil TD and finance committee chair John McGuinness amid claims that the Government, because of its bank shares, and the Central Bank will fail to fully address what happened.

In a letter to Mr Draghi, Mr McGuinness said “independent oversight” is still needed. However, Finance Minister Paschal Donohoe has confirmed that the Central Bank may ultimately impose €10m fines on each of the banks involved.

Because the fines will not necessarily ensure that the 20,000 victims of the scandal receive full compensation, Mr McGuinness said the ECB must be called in to guarantee that the people most affected receive all the supports they need.

Mr McGuinness, who was central to highlighting the tracker-mortgage scandal, told the Irish Examiner last night that the ECB is allowed to come to Ireland to oversee compensation plans, under EU European banking supervisory regime rules implemented in 2014.

He said that former finance minister Michael Noonan alluded to the legality of the move when he told the Oireachtas finance committee on July 4, 2013, that the ECB could fly supervisors to Dublin or base teams here to “take control”.

“We absolutely need independent oversight,” said Mr McGuinness last night. “The Central Bank has a conflict in protecting the stability of the institutions, and the Government has a conflict in the shares.

“We need to ensure the banks are properly offering the redress, giving the compensation package, and that there is no risk of this happening again.”

The call for the ECB to oversee the tracker-mortgage fallout is likely to be controversial, due to the ECB’s role in the Troika during the recession.

However, it is expected to be supported by a number of TDs, who remain concerned that the Government’s plans of last week to address the scandal did not go far enough.

The plans did not insist on immediate changes at the top of banks, pay structure alterations, or new board memberships rules. Mr Donohoe admitted during an RTE radio interview on Saturday that the State’s bank share prices were a consideration in any intervention.

Fianna Fáil’s finance spokesman, Michael McGrath, and communications spokesman, Timmy Dooley, said that Mr Donohoe’s statement was proof the Government’s bank shares mean it and the Central Bank are “conflicted” on the issue — with Mr Dooley telling RTE’s The Week in Politics that Fine Gael is “still playing footsie with the banks”.

However, the claim was rejected yesterday by junior finance minister Michael D’Arcy, who told the same programme: “We’re not conflicted.”

Meanwhile, the Central Bank could impose up to €10m fines on each bank found guilty of involvement in the tracker-mortgage scandal, as part of fresh sanctions unrelated to compensation measures.

Asked about the issue on Newstalk radio’s On The Record programme, Mr Donohoe said individual banks could still be held to account and hit with multi-million euro fines, similar to the €4.5m fine imposed on the Permanent TSB (linked to Springboard Mortgages last November for overcharging tracker-mortgage customers). The €4.5m figure was imposed under pre-2013 laws, which limited sanctions to €5m. However, under new laws, implemented in 2013, the amount has doubled to €10m.

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