Banks facing levy hike for mistreating mortgage customers
AN INCREASE in the bank levy is on the agenda following a continuing failure by the big banks to address the tracker scandal, Education Minister Richard Bruton has said, warning that financial institutions will be ‘ruthlessly pursued’.
The big banks are facing annual levies of €10million to €15million if they do not offer to immediately institute compensation at their meetings with Finance Minister Paschal Donohoe next week.
A ratcheting-up of the pressure came yesterday with the deployment of the bank levy in public discourse for the first time, wheeled out from behind the scenes by Mr Bruton – standing in for Leo Varadkar, who was in Brussels.
‘We have no truck with behaviour that brings people to the state of frustration and dismay we have seen,’ Minister Bruton said.
‘The Taoiseach is very clear that any powers the Central Bank needs will be provided and that the Government will not be afraid to take other measures, including enhancing the bank levy.’
Mr Bruton pointed out that the levy was set to raise €750million between now and 2021.
The Minister for Finance will call in the banks and will address the issues,’ Mr Bruton told the Dáil.
‘The Government takes this extremely seriously. In the view of the Government, any failures by the banks should be ruthlessly pursued.’
Fianna Fáil spokesman on public expenditure Dara Calleary said: ‘Everybody agrees the way the banks have treated those on tracker mortgages is abominable, to say the least.
‘Despite the Taoiseach’s sudden interest in this issue, it did not just happen today or yesterday but has happened for many years.’
He questioned the Taoiseach’s remark that the Minister for Finance would meet banks next week to admonish them over their behaviour. ‘What did he mean by “admonish”?’ he asked. ‘The people affected do not need tea and sympathy but action, compensation and, most important, justice.’
Mr Calleary added: ‘The lastminute attempts by the Government to threaten banks to fix it or face a levy will allow the banks and the Central Bank to get away with it, without anybody being held accountable.
‘Even after the scandal was exposed and the banks told to recompense customers, they slithered and slid away from what they were supposed to do legally, financially and morally.’
Since 2015 the Central Bank has conducted an industry-wide examination of tracker mortgage issues, including where banks wrongly denied customers their contractual right to return to a tracker rate of interest following a period on a fixed rate.
Last February the Central Bank confirmed that the total number of affected customers covered by this probe stood at a minimum of 13,000.
Mr Calleary said: ‘It would stop you in your tracks to listen to the impact this has had on people’s health, on that of their families, on their household incomes and on their ability to live their lives.’
He added: ‘Banks have caused enough stress in this country. They brought the country to its knees. Given that experience, they should have woken up to their corporate responsibilities, their social responsibilities and their moral responsibilities.’
An Oireachtas committee was told of one customer overcharged on their mortgage for over four years. In May 2016 they were put back on the correct rate, but have yet to be repaid, 17 months on.
Over €20,000 was overcharged and the bank has yet to make an offer of redress or compensation.
Another victim told the Finance Committee that the stress of being cheated led to him suffering a stroke while his wife had a nervous breakdown.
Data obtained from the banks shows at least 23 family homes were wrongly forced to be sold.
Minister Bruton said the Government ‘will take any steps necessary’, including giving the Central Bank additional powers. Paschal Donohoe would be very clear as to the ‘expectations’ of Government from the banks to remedy their bad behaviour in full, he said.
Appalling trauma had been caused in the economy and society generally by bad bank lending and poor regulation, Mr Bruton said.
‘There is now an absolute obligation on banks to fulfil their responsibilities to their clients. The Central Bank and the Government take this very seriously,’ he said.
Mr Calleary responded, saying that while Minister Bruton said the Government would have no truck with this behaviour, it had known about it since 2015.
He said: ‘The banks have dragged their feet and have dragged people’s lives through the muck since that time. The Minister has been in Cabinet since 2011 so if the legislation was defective and weak, he has had six-and-a-half years to fix it. But he has not. There seems to be no plan to do it, although there is a vague promise on the matter.’
He cited the case of bank customer Garreth Murphy, whose illegally altered tracker mortgage is costing him an extra €500 per month.
‘No remedy is being put on the table for him,’ Mr Calleary said. ‘His is one of nearly 20,000 similar accounts.’ He warned Mr Bruton against making false promises on this issue.
Mr Bruton said the Central Bank has initiated enforcement investigations over some of the behaviour of individual banks.
‘It is engaging with other statutory bodies, including the Garda Síochána, so there is no flinching from pursuing this,’ he said.
‘Banks have caused enough stress’