‘THE BIGGEST SWINDLE IN OUR HISTORY’
In extraordinary scenes, TDs savage Ireland’s biggest banks for brazenly stealing €500m from customers – under the nose of the Central Bank
THE country’s biggest banks conspired to steal half a billion euro from customers, TDs insisted yesterday – right under the noses of the Central Bank.
In excoriating exchanges at the Dáil finance committee yesterday, the banks were accused of ‘a collective theft from the Irish people’. Committee members said it amounted to ‘the biggest financial swindle in the history of the State’.
TDs demanded to know if the Central Bank was investigating which bank staff were responsible for the scandal – and whether anyone would ever face punishment for what had happened.
And they repeatedly questioned if the Central Bank was doing enough, or
taking a tough enough line with the bankers responsible.
Chairman John McGuinness said the Mail’s coverage of the scandal had reflected the public’s outrage on the matter. Holding up a copy of two front page stories from the Irish Daily Mail, he said the banks ‘stole money from people which they did not repay... and they have not given it back. They took that money fraudulently’.
Up to 30,000 borrowers have lost out after their bank wrongly took them off low-rate tracker mortgages – and put them on higher rates – even though the customers were entitled to lower ones.
The committee heard the total amount wrongly taken from customers was likely to reach €500million. The committee heard how every single lender which was offering trackers – 11 in total – has been caught up in this scandal. Mr McGuinness said it was ‘a question of grand theft from thousands of people’, and asked Central Bank Governor Philip Lane: ‘How, in the name of God, can you stand over any of it?’
The Fianna Fáil TD asked: ‘Why can’t you say to the bank [who lent the money], you stole the money? Give it back.’
In response, Professor Lane acknowledged: ‘This is a scandal.’
One of the Central Bank’s jobs is to regulate banks.
Yesterday Leo Varadkar told the banks to ‘get on with it and sort it out’. The Taoiseach threatened to act against the banks but urged them to fix the mess themselves.
‘The banks have it in their power to sort this out within a matter of months,’ he said. ‘Legislation, new sanctions, would take longer. I really think the banks have prevaricated and dragged their heels for too long now.’
Prof. Lane yesterday estimated at least 20,000 tracker customers have been affected, although some campaigners have put the figure at 30,000.
More than 100 people have lost their homes to date after being wrongly taken off tracker rates, of which 23 were family homes and 79 were buy-to-let properties. The Central Bank said it has twice met gardaí on the matter but has yet to make a formal complaint.
It emerged yesterday that potentially thousands of other homeowners could miss out on compensation for being wrongly moved off their tracker rate.
The Central Bank has said it has uncovered a ‘significant’ number of newly affected homeowners outside the current compensation scheme – but it will not use its powers to insist the banks give these customers redress.
The Central Bank was yesterday labelled the ‘dog with no bark’ and was accused of a ‘dereliction of duty’.
More cases of those affected by the tracker scandal are likely to be uncovered as Central Bank officials plan to conduct ‘on-site inspections’ in nine banks by next March.
After carrying out two such inspections in recent weeks, they discovered a ‘significant’ number of homeowners who they believe are affected but the two banks in question have contradicted this.
Many of these are current cases which occurred after the Central Bank was given powers in 2013 to insist on redress from banks. But Mr Lane has confirmed the regulator is not currently planning to use these powers and will instead tell borrowers to go to the Financial Services Ombudsman and even the courts.
Derville Rowland, the directorgeneral of financial conduct at the Central Bank, told the committee: ‘We are demanding that the two banks that we are not happy with, and there will be more that we will find we are not happy with, to come back and answer us. But actually we think the disagreement has probably reached the stage with some of them where there is no point in continuing an inconclusive conversation any more.
‘But what we have the power to do is direct the lending institution to identify by name the specific individuals we are concerned about, to write to them and notify them of the decision not to include them and to tell them of their right
‘The Central Bank has the powers’
of redress to the ombudsman and the courts.’ And Prof. Lane said: ‘Rather than get into a legal dispute, it would be much better to persuade the banks on voluntary basis to make a good and decent offer.’
At one point, however, Sinn Féin’s finance spokesman Pearse Doherty described the scandal as ‘the biggest financial swindle in the history of the State’.
He said: ‘I am absolutely shocked that the Central Bank has come in here, acknowledged that they are of the view that certain people are being overcharged in real time, that this is being disputed by the bank, and the Central Bank says that if it is not resolved then they have the power to direct the bank to get the names of those customers, then go the financial ombudsman, which itself is a lengthy process and which in itself could be appealed by the lender, all the way to the Supreme Court.’
The Donegal TD also said: ‘The Central Bank have powers for redress where overcharging is happening currently. And you are of the view that overcharging is happening currently. Instead you are saying to these people: “Go to another agency of the State.”
‘I put it to you that it is a dereliction of your duty in your duty of consumer protection.’ Mr Lane denied this. The Central Bank has no powers to impose compensation or redress for cases before 2013. Prof. Lane said it was using ‘moral persuasion’ in those cases.
Fianna Fáil’s finance spokesman Michael McGrath said it was ‘one of the greatest consumer ripoffs in our State’s history’.
IT is no exaggeration to say that most people in this country have had their fill of politicians. That they are sick and tired of the evasion, the obfuscation, the downright nonsense from our political class. That all they see and hear, week in and week out, is more of the same old politics, the jobs-for-the-boys culture, the endless self-interest and self-aggrandisement.
What they rarely come across is straight talking and a willingness to call to account, on behalf of the citizenry, those who need to be called to account.
That standards and, therefore, expectations should be set so low makes the diligence and doggedness of John McGuinness and his colleagues on the Dáil finance committee all the more impressive, and welcome.
For what we have here are Dáil deputies, elected to represent the people, who take their positions seriously and are, indeed, representing the people. Anyone in any doubt about the bona fides of Mr McGuinness and his committee members in this regard need only listen back to yesterday’s Oireachtas proceedings.
What you hear are politicians telling it as it is in relation to the scandalous abuses of our banks over the tracker mortgage fraud. ‘Grand theft’ John McGuinness rightly called it before also accusing the banks of robbery and fraud, of stealing people’s money and downright refusing to give it back.
And it was heartening, yesterday, to witness the committee’s specific acknowledgment that one newspaper in the State – this newspaper – has tirelessly and repeatedly highlighted this scandal over recent months. And will continue to do so.
Also, it was reassuring to see yet another problem being highlighted – the inertia and utter feebleness of the Central Bank in calling to heel the banks who operate under its very auspices.
According to governor Philip Lane, the Central Bank is indeed on top of the situation. We heard that things were ‘crystalising’, we heard how business was being conducted ‘pro forma’. We heard, in other words, yet another string of banking speak. Empty words that mean absolutely nothing to the thousands of families who have suffered so appallingly at the hands of our fraudulent banks.
For let us not forget that this scandal has been ongoing for years, and yet only recently has the Central Bank begun to take its watchdog role seriously. Even then, when they finally dragged themselves into the arena, they gave the banks two years to get their houses in order and deal with the problem. Two months would have been an adequate timeline.
Two years was simply ludicrous and yet, even with that leeway the banks are still languishing behind and failing to right their terrible wrong. They are still not compliant. And they are still, as John McGuinness pointed out, treating our parliament with contempt.
Part of the problem stems from the point that the Central Bank is not the correct choice when it comes to protecting citizens from the lending banks.
Governor Philip Lane is undoubtedly a brilliant economist with expertise that extends to all aspects of monetary policy. But he is not the person to deliver the shock that is required. In blunt terms, he is not an enforcer.
The Central Bank’s approach is too namby-pamby. What we need is a Dirty Harry, a bank watchdog with real teeth, operating purely on behalf of consumers. A body determined to do whatever it takes to sort this out, and to fine not the banks, but the individuals responsible for this flagrant abuse of power.
John McGuinness is correct. This is grand theft. And when someone steals they must be seen to pay.