Central Bank needs to be given stronger powers to sanction banks, says Finance Committee chairman

The Central Bank needs to be given stronger powers to sanction banks, according to the chair of the Oireachtas Finance, Public Expenditure and Reform Committee.

Central Bank needs to be given stronger powers to sanction banks, says Finance Committee chairman

The Central Bank needs to be given stronger powers to sanction banks, according to the chair of the Oireachtas Finance, Public Expenditure and Reform Committee.

John McGuinness was responding to the Central Bank's final report on the tracker mortgage scandal, which revealed that more than 40,000 customers had been affected by lenders' failings.

Some 99 people lost their homes as a result of the tracker mortgage fiasco, with a further 216 buy-to-let properties were also repossessed or handed over.

The report confirmed that the country's five main lenders - AIB, Bank of Ireland, KBC Bank Ireland, Permanent TSB and Ulster Bank - accounted for 98% of the affected accounts. Offers of redress have been made in respect of 98% of those affected, with money set aside to cover the remaining 2% who have yet to be located, according to the report.

The average redress paid in respect of the loss of a home is €194,000, but more than 3,000 customers have appealed compensation offers to date.

The five main lenders have put aside €1.1bn to cover the total cost of compensation, redress, fines and administration. In May, Permanent TSB was fined €21m by the Central Bank for “serious failings” and enforcement investigations are continuing against all the other main lenders.

Speaking on RTÉ radio's Today with Sean O'Rourke, Mr McGuinness said the findings showed that the banks "must be controlled".

He rejected a claim by former MEP Brian Hayes, who is now head of the Banking and Payments Federation Ireland, that "bank bashing is the new group think".

"It's an expression of frustration by ordinary people at the manner in which they are being treated by the banks," said Mr McGuinness. "Bank bashing has not resulted in any changes or improvements."

The Central Bank must have its powers extended so it will have the remit to force banks to admit that what they did was wrong, he said, adding that "banks must be controlled".

Fianna Fáil finance spokesperson Michael McGrath said the "culture of Irish banks" has to change.

"The Central Bank’s review and subsequent enforcement proceedings have to date failed to hold anyone personally responsible or accountable for this scandal," he said. "Until there is personal accountability, we will see these types of scandals occur again in the future."

Labour finance spokesperson Joan Burton called for an independent investigation into the tracker scandal. "Why was it so widespread, who authorised it and how did it happen. Enforcement action alone is not good enough," she said.

ends

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