NEW BODY TO LOOK AFTER BEWILDERED TRACKER CUSTOMERS?
Banks facing action over mortgage scandal
POWERS could be taken off the Central Bank and given to a new body to deal with the tracker mortgage scandal.
more homeowners who were wrongly taken off cheap tracker mortgages.
More than 100 people have lost their homes as a result of the scandal. Mr D’Arcy said yesterday: ‘All options are on
Junior finance minister Michael D’Arcy has raised the possibility of a new way of helping the 20,000 or
the table. The levy could be increased. The legislation could be altered. The consumer protection section could be removed from the Central Bank and be established independently. So we are not ruling anything out.
‘This matter needs to be concluded. The Taoiseach said this needs to be concluded by the end of the year. I believe it will be concluded before then.’
It is understood the new body could be a consumer protection body partly funded by the banks. The Central Bank currently has a statutory mandate to ensure that the best interests of consumers are protected.
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. Reports say the bill to put the scandal right could come to €500million.
Speaking about the origins of the scandal, Mr D’Arcy said it was at the minimum ‘complete incompetence,
‘Treated people badly for years’
at a worst-case scenario potentially it could have been conspiracy to defraud people. Most likely it was somewhere in between’.
He said: ‘The well is empty in relation to this Government and how the banks treat their customers. It’s been going on for decades. Irish customers of financial institutions have been treated badly and it can’t continue.
‘I’m going to give the banks some friendly advice that they need to get this matter concluded very, very quickly or else the Government will lead in the Oireachtas.
‘And the only debate that will take place in the Oireachtas will be how much the banks will be impacted by whatever decisions we decide to go with.’
But, he said: ‘If you go down the legal route it will take years.’
He said it was ‘not good enough’ that only around 3,500 people have been compensated to date out of the 20,000 affected homeowners.
His remarks come after Taoiseach Leo Varadkar has raised the spectre of increased regulation and harsher sanctions as well as bank levies on banks who do not rectify the problem.
Finance Minister Paschal Donohoe is due to meet a number of bank chief executives today for a showdown over the tracker issue.
Mr Varadkar has indicated he would consider a levy on banks on those who do not address the tracker mortgage scandal.
Junior minister for rural affairs Seán Kyne yesterday said that rushing legislation through before Christmas for such penalties should be considered.
He told RTÉ’s The Week In Politics: ‘Whatever legislation is needed to fine the banks should be prepared now [and] should be ready to go. And I think that threat needs to be made by Minister Donohoe to the banks, and have that rushed through the Dáil, as it were, before Christmas if needed.’
A series of meetings are to be held between Mr Donohoe and banking bosses from today to Wednesday.
Mr Kyne said legislation should be made ready immediately in the event the meetings with bank CEOs are unsuccessful.
Mr Varadkar told a Fine Gael dinner on Saturday: ‘We need to see what happens next week. Minister Donohoe is going to meet the heads of the banks during the week and he is going to speak to them and demand further action.
‘Ninety-eight per cent of people who wrongfully had their trackers taken off them have had them restored but that is not good enough. So we would expect them to be under way, at the very least, by the end of the year.
‘As someone who has a tracker mortgage I know how beneficial it is to have that and people who paid thousands more as a result of it, we really need to make sure that they are treated properly.
‘The Government is taking this issue very seriously, and we are very frustrated at the lack of progress to date. We are not ruling out further regulation, further sanction, and further taxation.’
The Cabinet is to meet this week and is expected to discuss the tracker scandal.
Sinn Féin’s finance spokesman Pearse Doherty yesterday said the compensation being offered to those affected is around 10% of the total value of the loss on each customer.
On the issue of the threatened bank levy, he said: ‘When we talk about increasing, we have to remember these banks are not paying any tax. Of course I would support an increase.’
‘We won’t rule out further regulation’
AS I write this I have a thumping great brown file beside me, the cover of which is scrawled with the ominous words; ‘Mortgages dealings with the bank and Ombudsman’.
I have not looked at its dreaded dogeared contents since 2012 when my case with the banking authorities over my tracker mortgage came to what I now realise, given the evidence of thousands of unhappy mortgage holders, was a miraculously swift resolution.
True, over recent months as the row has rumbled on about the banks’ unscrupulous handling of loss-making tracker mortgages, and especially during the Oireachtas committee hearings where customers described the immense toll of stress and heartbreak caused by the scandal, I have at times thanked my lucky stars that we escaped so lightly, and vaguely wondered how exactly that came to pass .
But until this morning I have never tried to piece together the events of the sorry saga.
I have never dragged the bulging folder from the back of the cupboard where it has lain half-forgotten, leafed through the dense and unwieldy correspondence from bank officials and bureaucrats, scanned the charts of interest rates and mortgage balances, or the formal letters marked Strictly Private and Confidential, to recall how exactly the bank ripped us off.
The truth is that the letters are double Dutch to me. I don’t understand the terminology or the jargon: ploughing through them gives me such a headache that I almost lose the will to live.
I’m a reasonably intelligent person, or so I like to think, and I certainly can’t use youth as an excuse but I feel as if I’d have to become an accountant before I could make sense of it.
Such is my bewildered state that my mortgage travails are almost as much of a mystery today as they were in 2006 when all the trouble began and my husband and I took out a boom-time mortgage on a family home and signed on the dotted line.
There was nothing remarkable – or so I stupidly thought – in our dealings for the first few years. The mortgage went out on the same date every month from our current account and that was that as far as I was concerned.
Hand on heart I couldn’t have told you the interest rate but it seems from some of the historical emails in the folder that I was aware in the beginning at least, that it was a tracker mortgage.
The first time alarm bells were raised was when we returned from Easter holidays in 2011. There was a letter waiting us from the bank, saying that an investigation by the Central Bank showed that we should have been offered our tracker rate back in 2009, when we were paying a higher variable interest rate for almost a year. The letter also said that our mortgage account was being credited with over €2,500, the amount we had been overcharged.
To say that I was taken aback would be an understatement. Laugh all you like and it’s easy to in retrospect, but I had naively trusted the banks to not make mistakes and to not take advantage of our lack of financial acumen, our inability to make sense of a mortgage contract.
In the pre-banking crash and pre-Anglo era, I still thought banks had the best interests of their customers at heart.
But my startlement turned to anger when in a move that was quite uncharacteristic of me, I investigated the short history of our mortgage.
Ridiculous
And that anger was not just for the bank who played us for fools but also towards myself and my husband for our head-in-the-clouds attitude to finances, for our recklessly trusting the biggest purchase of our lives to an outside party, one who patently could not be trusted.
Long story short but we had a favourable tracker mortgage in July 2006 and a year later we gave it up, signing up for a fixed rate of 5.09% for two years. In June 2009, we opted for a variable rate of 2.7% and the following year for a three-year fixed rate of 3.6%.
I subsequently discovered that the reason we went off the tracker in 2007 – which seems at first sight a ridiculous decision – was that the ECB rate on which the tracker was based was rising and we were probably advised that fixing the rate on 5.09% was the safest bet. Of course it was in the banks’ interest that as many people as possible surrender their tracker, and lots of customers who are now in trouble did exactly that.
For many it’s the starting point of their mortgage woes as they were never offered them back.
I remember letters coming from the bank over those years, offering a menu of interest rate options, and I have vague recollections of discussing the best option with the mortgage manager. Invariably, I took their advice. Silly me.
I now know that the tracker rate had been quietly taken off the table as it was causing the banks to lose too much money. But I didn’t know enough then to ask if I could have the original deal back. And if not, why not. I never smelled a rat.
I wrote to the bank formally in 2011 to ask for a refund of the amount I had been overcharged while on the fixed rate and to have the tracker reinstated. It returned the tracker but not the refund.
I asked the Financial Services Ombudsman if I had a legitimate complaint and they said they were not in a position to give an opinion.
They did say, though, that I didn’t have to justify my complaint but to send them in copies of all my correspondence with the bank.
I sent them masses of stuff, anything I possessed with the bank’s logo, and hoped for the best.
Months later the bank offered a refund of almost €8,000 in return for a quick settlement.
Again, the Ombudsman would not give an opinion on whether this was an okay deal. We accepted it but even today we still don’t know whether it was for our benefit or the bank’s. I guess we should have hired a financial adviser.
The heavy file was pushed to the back of the cupboard where it remained until today, a body of evidence about the bank’s intransigence and untrustworthiness but also a guilty reminder of the glaring financial incompetence which made us such easy prey for the bank and which could have destroyed us financially.
If I ever buy another house, perish the thought, or have serious dealings with the banks, I will from now on pay an expert to negotiate on my behalf.
The other option, I believe, is to qualify as an accountant, and I’m certainly not about to do that. Life’s too short to worry unduly about money.
Our shady banks should not just refund the monies they overcharged their mortgage customers but pay handsome compensation for the misery they have caused.