Small firms have shut and their workers lost their jobs over this

FINE Gael’s Michelle Mulherin has accused the banks of tricking small firms into moving off tracker loans.

She told the Dáil finance committee how in ‘extreme cases’ this resulted in the ‘devastation’ of businesses, with some being forced to close or employees losing their jobs.

Senator Mulherin said: ‘You’re talking about situations in the extreme where you’ve seen closures of businesses, loss of jobs and the whole personal fallout of the

‘Devastated by the actions of banks’

individuals involved, and I’m talking particularly about SMEs and trackers here.’ She continued: ‘We know that, as regards SMEs, do not have access to the Financial Ombudsman in the same way as the private citizen does. ‘So their only recourse for remedy, if they can and if they’re able, is the courts. They don’t have the same layers that are available to consumers.’ She asked if the banks had been ‘assessing and investigating’ the impact on SMEs as well as regular homeowners. ‘In that process of assessment, how many such cases has the Central Bank discovered?’ she asked at the Dáil finance committee. ‘Obviously the focus is on people and their homes, and there’s a clear reason why that is, but there are people with small businesses who have been devastated by the actions of the banks, overcharging and this sharp practice, if not illegal carry-on, which of course remains to be proven.’

Ed Sibley, the Central Bank’s deputy governor for prudential regulation, replied: ‘If you have specific concerns we would look at them and investigate them very seriously.

‘They are serious accusations which you outlined there.’

She asked: ‘Are you aware of this issue and have you been assessing this issue?’

He confirmed there had been ‘issues raised’ in relation to specific institutions around the treatment of small businesses.

She replied: ‘I don’t think you have answered the net question. We are trying to quantify an issue so have you got numbers or is it basically a case-by-case basis as regards these SMEs as people come forward, or have you some other method whereby you are ascertaining the numbers of cases where the banks have acted in this fashion in respect of commercial loans which are trackers?’

Central Bank governor Philip Lane said: ‘I think you’re raising an interesting question about whether there are other violations of our codes which could have happened in respect of SMEs.’

Mr Lane conceded there is no ‘comprehensive’ examination of this.

Ms Mulherin said homeowners were the focus of the investigation but that there had also been ‘considerable abuse’ by the banks of their ‘position of power in relation to negotiating terms and conditions’ with small businesses. ‘Are you satisfied that there are adequate mechanisms in place to assist SME companies who have legacy issues with the banks?’ she asked.

Mr Sibley said there were ‘specific codes of conduct in place’ when banks are dealing with small businesses and that they would be held to account if these were breached.

Ms Mulherin suggested that banks’ licences should be revoked if they consistently breached the rules.

She said if you fine the banks then they simply ‘pass [the cost] on’ to customers.