Tracker mortgage scandal - Hit the banks where it hurts

There is only one way to deal with wayward banks — hit them where it hurts. 

That uncomfortable truth has at last been recognised by the Taoiseach who warned yesterday that he will raise taxes on banks if they don’t move faster to provide compensation for the scandalous overcharging of thousands of mortgage customers.

The problem with taxing the banks more is that they will pass on this extra cost to their customers. A more effective measure would be to facilitate class actions so that overcharged customers could sue for compensation without the worry of huge legal costs.

The Central Bank has identified 13,000 customers who should have been given the option of a cheaper tracker mortgage years ago but, as the Oireachtas finance committee heard last Friday, the real figure could be as high as 30,000.

The reason we do not have an exact figure is because some banks are failing to co-operate fully with the Central Bank’s investigation into the tracker mortgages scandal.

It has

attempted to order banks to repay the difference to mortgage holders affected and offer compensation but it is being largely ignored.

It appears that, despite increased powers and a stated determination to enforce compliance, the Central Bank has neither the will nor the way to change fundamentally banking culture.

Until it has both, nothing will change.