Time for plain talking about who is to blame for tracker scandal
IN the aftermath of the banking crisis — yes, the one that is on track to cost taxpayers and bank customers a net €32bn — we were told the problems in the sector were “systemic”. In a way it meant that everyone was to blame, so therefore nobody was to blame.
We were also told about the “culture” in the banks that contributed to these rather expensive €32bn-worth of mistakes.
Well, the words “systemic” and “culture” cropped up again last week in relation to banks and the regulator. Central Bank governor Philip Lane was giving an update on his investigation into the tracker mortgage scandal. This is the one which saw more than 10,000 people charged the wrong interest rate by multiple banks at a final cost of up to €500m. Some lost their homes.
Lane told the Finance Committee there was a “culture in banks of interpreting mortgage contracts in favour of lenders and not in favour of consumers”. Well that is a surprise and what a shocker that must have been when that was uncovered!
He added that there was a “systemic and widespread aspect to this”.
Given that most of the banks operating in the Irish market were at it, you definitely could say that, Philip.
A bit like the Garda Commissioner and the breath tests, there is a time for plain language that spells out what happened here.
But who will carry the can? Were rules breached? Will heads roll? Well, the investigations are still ongoing and won’t be complete until September 2017 at the earliest. Apart from having to look at close to two million mortgage accounts, there are question marks over the level of co-operation provided by the banks.
The Central Bank is conducting enforcement investigations in some cases. Curiously, in a week when his director of enforcement, Derville Rowland, said she had held discussions with gardai about certain matters, no formal report has been made to them.
In fact, Lane told the committee: “We may also commence other investigations, as appropriate, into other lenders and persons concerned in the management of such entities.”
Justice moves slowly in financial services regulation.
The Central Bank intervened on this issue between 2008 and 2015 which resulted in 7,100 customer accounts affected by tracker issues being resolved. That was a positive outcome but why did it take that long before commencing a formal examination of the practice and its widespread use in 2015?
I have no doubt that thousands of tracker victims will get recourse and the Central Bank has done its job in that regard.
But we are none the wiser as to who is to blame, as in what executives and what levels in the banks, and whether they will pay any price.
Investigations under the Central Bank’s Administrative Sanctions Procedure can result in disqualification of directors and personal fines.
We will have to wait and see what happens.
Perhaps it was all just one big industry-wide misunderstanding.