The warning comes as the Central Bank revealed a dramatic increase by 13,600 to 33,700 in the number of cases it has forced lenders to acknowledge.
It said the compensation and redress by the mortgage banks has to date reached almost €300m.
However, financial consultant and consumer advocate Padraic Kissane said the new figures mean the total compensation bill for the scandal will reach €1bn, while the follow-on from the investigation will mean that fines for the banks “will be off the charts”.
After winning the cases for two customers eight years ago, Mr Kissane went on to liaise with the Central Bank’s investigation to fight for 3,000 customers.
He said everyone who lost a home because of the scandal should be compensated and have their tracker mortgages restored and their stamp duty paid, if they qualify for a home loan.
The Central Bank revealed that its pressure led to lenders admitting:
- 13,600 additional customers were brought into the scope of the investigation;
- €297m has been paid into compensation to date “with more to follow”;
- KBC said its total for affected customers has increased to 3,545 as the reviews progressed;
- Bank of Ireland confirmed in November that it had identified another 6,000 borrowers who were overcharged, bringing its total to 14,500, including 5,000 who had been addressed in 2010;
- AIB’s number of affected customers is up to 5,402;
- Ulster Bank had 3,500 customers on the wrong rates and Permanent TSB 1,980.
Central Bank governor Philip Lane said: “Many lenders publicly state they put customers first. The evidence of the examination that we have suggests otherwise.”
Its report said all of the main lenders will likely face enforcement investigations.
In previous reports, the Central Bank said it had engaged with gardaí and the Competition and Consumer Protection Commission.
Economist Jim Power said staff in the banks “had been lied to” by top bank executives about the scope of the scandal.
“Banking is still characterised by extreme arrogance and the Central Bank systems in place like almost everywhere are not nearly sophisticated enough to deal with financial services,” he said.
The numbers involved in the tracker scandal will rise further and the banks must “now come clean” as to the full extent of the crisis, the chair of the Oireachtas finance committee has said.
John McGuinness, who highlighted the issue earlier this year, said the committee will now hold further meetings with the Central Bank and the ombudsman to to find out the extent of this crisis.
“We will hold further meetings in the New Year. It is clear Padraic Kissane was correct. This will get worse and bigger in terms of the numbers affected.
"I would urge the banks to get ahead of this and come clean and make sure adequate and fair compensation is given to those affected, which would mean substantial compensation in some cases,” he said.
The need for accountability at both the institution and individual senior executive level is imperative, according to Fianna Fáil’s finance spokesman Michael McGrath.
Speaking in the wake of the report, Mr McGrath said: “The real story behind this update is that the lenders did not voluntarily reveal the full extent of the tracker mortgage scandal.”
Finance Minister Paschal Donohoe said the five banks are making compensation and redress payments in line with the Central Bank’s framework, which ensures fair treatment is assured for customers.
He said customers can be assured that any payment that they receive, they will keep.