Focus on bank bosses as Ulster Bank fined record €37.8m for tracker scandal

Ulster Bank 'devised and implemented a deliberate strategy' to keep some customers in the dark and 'caused unacceptable and avoidable harm' that involved 'significant overcharging to the loss of 43 properties' . File picture: Sasko Lazarov/Rollingnews.ie

A record fine of €37.8m for Ulster Bank for its part in the industry-wide tracker mortgage scandal has put the focus back on the lack of accountability for top bosses in Irish banking.

The Central Bank said Ulster Bank had admitted its “serious failings” that involved 5,940 of its mortgage customers, some of whom lost their family homes because they were purposely overcharged and misled over a long period.

Ulster’s 49 regulatory breaches included the bank having “devised and implemented a deliberate strategy” to keep some customers in the dark and “caused unacceptable and avoidable harm” that involved “significant overcharging to the loss of 43 properties, 29 of which were family homes”, the regulator said.

Redress to customers

The size of the fine – the Central Bank’s largest-ever – also reflects the scale of the pushback Ulster Bank launched against the probe and includes the bill of fully restoring and paying redress to customers who lost their homes, as was the case for other banks in the scandal. 

On top of the fine, the bank has so far paid €128m to its customers.

However, the sanction for Ulster Bank is likely to have much less of an effect in improving behaviour across the industry because the lender last month announced plans to pull out of the banking market in the Republic altogether.

Ulster Bank Ireland chief executive Jane Howard. File picture: RollingNews.ie

And the proposed carve-up of Ulster’s €20bn loan banks between AIB and Permanent TSB that will likely worsen the levels of competition includes banks that were involved in the tracker scandal.

There have been calls for the Government to immediately bring in legislation, called the Senior Executive Accountability Regime, or Sear, to toughen sanctions for top bank bosses.

However, financial adviser Padraic Kissane, whose work more than 10 years ago helped to first uncover the scandal, said existing controls under so-called fitness and probity, as well as pre-approval controls of top executives, should be enough to bring wrongdoers to account.

Misleading customers

Other experts have renewed calls on the Central Bank to put customers first by looking closely at existing products sold by banks that are, they say, misleading customers.

Leading broker Michael Dowling and Brendan Burgess of the Askaboutmoney site said cash-back mortgage incentives are misleading first-time buyers about the elevated costs of their home loans.

The specific Central Bank tracker settlement involves Ulster Bank as a regulated corporate entity and not individuals at the bank.

The regulator has consistently refused to make detailed comments on whether its investigations across all the tracker mortgage banks will lead to criminal investigations.

It has in the past said it had regularly liaised with gardaí during its probe into all banks and pointed to the powers it wields under existing rules.

The Central Bank opened investigations six years ago into all lenders that sold the tracker home loans, which have also involved multi-million settlements by Permanent TSB and KBC Bank. Settlements with AIB and Bank of Ireland have yet to be announced.