Latest: Here’s how the banks plan to address the tracker mortgage issue.
The five banks that met the Finance Minister over the tracker scandal have issued statements on what they plan to do next.
What you need to know:
- 14,982 affected customers have been identified in reviews of trackers since 2015;
- 7,100 borrowers were found to have been impacted in an earlier examination taking the total number of confirmed cases to 22,082;
- Of the five banks, Ulster Bank has set aside €175m to cover compensation and redress; AIB €190m; and KBC up to €60m;
- Bank of Ireland says it will start a compensation process for 4,300 customers from November 10;
- AIB says by year end it will have identified 3,416 customers – 12 of whom lost their homes. Compensation will be paid by the first quarter of next year, it says;
- Permanent TSB says it has 1971 customers affected and all will be on the correct rate within the next week and, offers of redress and compensation will be issued by the end of December;
- KBC says to date it had identified 1041 customers affected but it now accepts there could be as many as 600 more – all will be identified by the end of the year;
- Ulster bank says 1,000 of its customers will be compensated by the end of the year with 2500 others compensated early next year. The bank is offering an initial €50,000 to those who lost their homes.
Update 4.45pm: The banks are releasing statements following their meetings with Minister for Finance Paschal Donohoe.
Mr Donohoe described the situation as “disgraceful”.
“Today all five banks have made statements unreservedly apologising to their customers who have been adversely and shamefully impacted by the tracker rate scandal,” he said.
“Let me be very clear – the Government believes that the behaviour of the banking sector in relation to tracker mortgages was disgraceful. This is a scandal. It should never have happened and the Government is determined to ensure that it should be resolved.
“The Irish people made extraordinary sacrifices to support the banks at the height of the financial crisis. Having done so, it is right that we demand, on behalf of the people, that the banking sector now, more than ever, operates in the best interests of its customers. The legalistic approach taken by some banks to avoid doing the right thing is simply unacceptable. Ultimately such behaviour is not in the interests of customers or shareholders.
“There has been a varying response from the banks and as a result, banks that did actually respond in a more appropriate and customer centric manner will not receive any credit for doing so. It is now time that all banks seek to regain the trust of the Irish people by actions, not words.”
Mr Donohoe says the banks need to resolve the issues as quickly as possible.
“The Government is determined that the banks resolve this matter as quickly as possible so over the past three days I have met with each of the Chief Executives of the five banks. At each of these meetings, I made my views clear.
“These discussions focussed on the scope of the tracker investigation, the timeline for a resolution, other follow-up actions and a review about the culture in Irish banking that allowed this to happen in the first place.
“Based on its ongoing investigation into the tracker mortgage issue, the Central Bank is of the view that some bank behaviour up to now has been unacceptable, legalistic and not customer centred. The Central Bank is also concerned that two banks had failed to fully identify customers impacted.
“Following my meetings this week, all the banks have committed to working with the Central Bank to fully meet its requirements. This will result in further affected customers being identified very shortly.
“I expect this aspect of the investigation to be finalised so as to minimise the uncertainty for such customers, and for redress and compensation for those further customers to swiftly follow.
“All redress and compensation will be in line with the ‘Principles for Redress’ set by the Central Bank. In that context the five banks have made the following commitments in terms of resolving the issue.”
- 4,152 customers identified as being impacted at 30th September.
- Almost 3,500 or 84% have already been redressed and compensated.
- Redress and compensation for remaining customers by the end of the year.
Bank of Ireland
- 4,300 customers identified to date as being impacted.Compensation process to commence from 10th November.
- All of these customers fully redressed and compensated by the year end.
- 490 impacted customers identified to date as part of the current examination;
- The vast majority of any remaining impacted customers to be identified by year end;
- Complete payment for the majority of customers by the year end;
- Payment with respect to more complex cases continuing into 2018.
- 1,971 customers identified as being impacted at this point;
- 1,608 (82%) have already been contacted with offers of redress and compensation – over 1,300 of the PTSB customers who received offers of redress and compensation have accepted those offers;
- The remaining 363 customers will receive similar offers by the end of the year.
- 3,500 customers currently identified as having been impacted;
- Redress and compensation to be made to 1,000 customers by the year end;
- Redress and compensation to a further 1,500 by end March 2018;
- The remaining customers being addressed by end June 2018.
All proposals and commitments made by the banks today are subject to challenge and further assurance work by the Central Bank.
Mr Donohoe also hit out at the “cultural issue and challenges” in the banks.
“It is clear to me, from the meetings over the last number of days, that significant cultural issues and challenges in some of the retail banks still exist,” he said.
“Customer interests have not been sufficiently protected or prioritised. This is unacceptable.
“Accordingly, I have mandated the Central Bank under section 6A of the Central Bank Act to prepare a report for me on the current cultures and behaviours and the associated risks in the retail banks today and the actions that may be taken to ensure that banks prioritise customer interests in the future.
“On foot of this report, the Government will determine whether any additional legislative and regulatory changes are needed that would enhance accountability in the banks for ensuring customer interests are prioritised.”
Read the banks’ statements in full here:
- KBC sincerely apologises for the past errors the bank has made and the distress this has caused our impacted customers.
- 571 tracker mortgage customers were already rectified in 2010;
- A further 490 customers have been identified as impacted to date, following further consideration and engagement with the Central Bank in relation to Phase 2 of the Tracker Examination;
- KBC anticipates that up to an additional 200 to 600 cases may be impacted;
- KBC continues to engage with the Central Bank in relation to the identification of impacted customers;
- KBC expects to book an impairment (in net other income) in the range of 40 to 60 million EUR in 3Q17;
- KBC expects to have concluded the identification of the vast majority of customers impacted by the Tracker Examination by year end;
- Payment of redress and compensation for customers identified so far will commence in early November. KBC will contact each customer individually. For straight forward cases, which we expect to be the majority, we expect to complete payment by year end. For more complex cases involving manual calculations for every individual case, payments will continue into 2018.
KBC fully acknowledges the past errors that occurred in relation to Tracker Mortgages should not have happened, were wrong and we sincerely apologise for this once again.
KBC takes this review very seriously and we recognise that the Examination has taken longer than originally anticipated.
It is a lengthy, complex process, involving a review of not only the documentation but also individual customer circumstances. We also understand the desire from all stakeholders to conclude the review as soon as possible and this matter is the top priority for the bank.
In a prior review concluded in 2010, the bank identified 571 customers that would have moved from a fixed rate mortgage to a standard variable rate, but based on a review of their individual circumstances, the bank concluded that these customers should return to a tracker rate following the fixed rate period. These customers had their accounts amended prior to the expiry of the fixed rate period so they then correctly rolled to a tracker product.
Under the current Tracker Examination, the bank has so far identified an additional 490 impacted customers that did not move to a tracker rate after a fixed rate period or were moved off their tracker rate following a change to the terms of their loan or are on the incorrect tracker rate. As part of the ongoing review and within the Tracker Examination, KBC continues to examine tracker mortgage customer files and as a result anticipates that up to an additional 200 to 600 customers may be impacted. KBC expects to have concluded the identification of the vast majority of customers impacted by the Tracker Examination by year end.
KBC has already corrected the rate for a number of customers earlier this year in accordance with the Tracker Mortgage Examination Framework and will continue to do so as cases are identified. Redress and compensation payments will commence in early November 2017.
Customers that have queries can contact KBC by email at TrackerMortgageExamination@kbc.ie or by calling on 01-6646983.
On Monday of this week, we met with the Minister for Finance, Paschal Donohoe TD (‘the Minister’), to discuss the tracker mortgage issue and Permanent TSB’s progress on dealing with the matter.
We gave the Minister a detailed update on how Permanent TSB has managed this issue to date and on when we will conclude the work; this included the following data and timelines:
Permanent TSB fully accepts the very strong concern and disapproval which the Minister expressed about the management of this issue across the banking sector.
On Monday, on behalf of the bank, we made a full apology for this issue to the Minister and we repeat that apology publicly today. The bank accepts the failures that led to this issue should not have occurred.
The focus in Permanent TSB is on bringing this matter to a conclusion. All impacted customers will be on the correct rate within the next week and, offers of redress and compensation will have been issued to impacted customers by the 31st December next. In line with the requirements set out, Permanent TSB’s work will be subject to Central Bank of Ireland Assurance Testing.
Customers seeking assistance in relation to these matters can call the Permanent TSB helpdesk on Freephone 1800 804 324 or +353 1 212 4867 [Monday to Friday 08.00 – 21.00 and on Saturday 10.00 – 14.00].
In order to identify impacted customers, analysis was undertaken on c. 650,000 accounts with a manual review of c.50,000 accounts.
The review did not rely just on the legal interpretation of customers’ contracts but, working at all times within the Central Bank framework, identified issues relating to contractual matters, inadequate levels of transparency and poor quality customer information.
This resulted in the identification of over 30 different impacted customer groups.
AIB is now well advanced and has redressed and compensated the majority of impacted customers who, as a result of the bank’s actions, were identified as (1) no longer on a tracker and (2) were incorrectly on a higher tracker margin for a period of time.
Customer Freephone Helpline – AIB: 1800 235 460 or EBS: 1800 235 461 (Mon-Fri, 8:00am-7:00pm)
1. Customers no longer on a tracker
- At the end of September 2017 AIB had identified 3,416 customers who were not on the tracker mortgage rate to which they were entitled. Ninety-one percent of these have had their trackers restored (to an average tracker margin of 1.2%) and have also been redressed and compensated. The remaining cases will be completed by the end of the year;
- We estimate a further 170 cases will be identified by the end of the year and these have an estimated completion date of end Q1 2018;
- One of our priorities was to deal urgently with the serious issue of family homes that were lost as a result of the issue. To date, twelve customers have been identified and these customers were redressed and paid compensation by Q1 2017.
2. Customers on a higher tracker margin
- During the review we also established that some customers, who remained on a tracker mortgage, were incorrectly charged a higher tracker margin;
- The majority of these were impacted for a short period of time and by up to €500;
- Two thirds of these customers will be redressed and compensated by the end of this year, with the remainder to be completed by the end of Q1 2018.
AIB commenced its investigation in August 2015, and the bank in that year made a provision of €190m to cover redress and related costs, €133m of which has been utilised. Approximately 500 people have been deployed to work on the review. From December 2015 the review has been conducted in accordance with the Central Bank framework and independently assured by KPMG. The programme includes putting customers back on the correct rate, refunding, compensating, and access to an independent appeals process.
AIB again sincerely apologises to customers and reiterates this should never have happened. AIB’s CEO Bernard Byrne confirmed to the Minister during their discussions of the commitment of management and Board to bring the programme to a conclusion as quickly as possible in the interests of impacted customers. Our priority is to continue the progress we have already made, with all the necessary resources at our disposal, in compliance with the Central Bank’s framework.
While the programme and examination continues, the significant progress outlined above positions the bank to achieve a conclusion of the programme, subject to the final agreement and approval of the Central Bank.
AIB has endeavoured to implement the most thorough and effective response to an issue that should not have arisen.
BANK OF IRELAND
Bank of Ireland has today provided an update in relation to the Tracker Mortgage Examination, and has set out a firm timeline for writing to customers regarding compensation.
- Right to Tracker: Bank of Ireland has identified c.600 accounts where a right to, or the option of, a tracker rate of interest was not appropriately provided to the customer in accordance with their loan documentation. Customers from this group were returned to the correct rate between December 2016 and April 2017 and they will shortly receive compensation;
- Rate Differential: The Bank has also identified a small rate differential, of an average 0.15%, on c.3,700 accounts on a tracker rate of interest which was not the appropriate rate specified in the account loan documentation. Customers from this group were returned to the correct rate between March 2016 and August 2017 and they will shortly receive compensation;
- Next Steps: Bank of Ireland will start the compensation process for these c. 4,300 customers from 10 November. This will involve calling and writing to customers from that date setting out a full offer of compensation in each case, and advising customers of the options which are open to them;
- Our process aims to compensate all customers, subject to their agreement, by the end of the year. The Bank, in line with the requirements of the Central Bank’s Tracker Examination Framework, will continue to review whether other customers should be included in the compensation process. This review will be undertaken from a customer and franchise perspective. The Bank is prioritising this review and a further update will be issued in mid-November.
“I unreservedly apologise to all impacted customers for the financial loss and anxiety this has caused them and their families,” said Francesca McDonagh, Group Chief Executive, Bank of Ireland.
“I am fully committed to fixing this as quickly as possible, and I made this commitment to the Minister for Finance, Paschal Donohoe TD, at our meeting on Monday.
“Since taking up my position as Group Chief Executive earlier this month, the tracker issue has been a personal priority. We have already returned impacted customers to their correct tracker rates. Our focus now is on commencing the compensation process to all impacted customers from 10 November. How we handle this critical issue will define the customer centric culture we aspire to at Bank of Ireland.
“All impacted customers must be identified as quickly as possible and treated fairly. I have reviewed the programme and directed that additional resources are allocated to deliver for our customers. The examination will continue to be a priority until the position has been resolved for every last impacted Bank of Ireland customer.”
Any Bank of Ireland customer who wishes to make contact with the Bank on this issue can call the Bank of Ireland Tracker Mortgage Examination Team on 1890 882 722, email email@example.com, or write to the following address: Bank of Ireland Tracker Mortgage Examination, PO Box 400, Castleisland, Co. Kerry.
Ulster Bank has agreed the following update for customers affected by the Tracker Mortgage Examination:
- 1,000 customers to receive payments by the end of 2017;
- This will increase to 2,500 customers in Q1 2018 with the remainder in Q2 2018;
- Where we identify a customer who has lost their home as a result of the loss of a tracker rate, we communicate with them, arrange a meeting and offer an upfront initial payment of €50,000.
“I would like to apologise unreservedly for the failures which led to customers losing their tracker rates, as well as for the length of time which it is taking for us to put this right,” said Ulster Bank Chief Executive Gerry Mallon.
“While we have returned existing customers to the correct tracker rate and started to pay redress and compensation, I acknowledge that this process is taking far too long to complete and this is not acceptable.
“I apologise to all customers, even those not impacted by the examination for this. We have listened, we are learning and we are focused on completing this process, putting this right and rebuilding our customers’ trust in Ulster Bank.
“We have agreed a timeline for the completion of our redress programme and we will pay 1,000 customers by the end of the year. Please be assured that we are doing everything possible to resolve this and we will update again in due course.”
Progress to date:
- Just under 3,500 identified as impacted;
- Existing impacted customers have been put back on their tracker rate;
- We have started to pay redress and compensation, with 100 paid to date.
Mortgage Examination Helpline on 1800 303 352 Freephone/Lo-Call from mobiles or +353 1 562 1269 if calling from abroad. Lines are open 9am to 5pm Monday to Friday except bank holidays.
Update 3.30pm: Former taoiseach Enda Kenny failed to act on specific calls six months ago for an immediate investigation into the tracker mortgage bank scandal, writes Fiachra Ó Cionnaith.
Tipperary TD Seamus Healy made the claim in a tense Dáil debate with Taoiseach Leo Varadkar which saw the opposition politician demand Government now orders the garda fraud squad to investigate banking institutions.
Speaking during the latest leaders questions debate, Mr Healy – who represents the Workers and Unemployed Action Group – said he asked Mr Kenny in April to “make a formal complaint to the garda and call in the fraud squad to investigate banks”.
Mr Healy said this was because of his concerns there was “a huge scandal that requires criminal investigation”, and that “any delay could lead to the destruction or alteration of relevant records with a view to blaming sub-ordinates and junior staff”.
However, despite the seriousness of the claims being made, Mr Healy said Mr Kenny “refused to call in the garda”.
“Six months later, all members can see the extent of the massive fraud involving 15 banks and €1bn, affecting 20,000 or more mortgage holders.
“Does the Taoiseach Leo Varadkar accept that if the then taoiseach, Deputy Kenny, had agreed to my demand six months ago to send the fraud squad into the banks much fraud could have been avoided and much trauma, pain and even deaths and self harm prevented,” he asked.
Responding to the claim, Taoiseach Leo Varadkar said Ireland is a democracy and that as such “the Taoiseach, former taoiseach or the Minister for Justice cannot send in the garda or the fraud squad”.
Mr Varadkar defended Mr Kenny, saying no formal complaint has been made to the garda fraud squad to date to his knowledge, and suggested Mr Healy should contact the gardai himself if he believes such action is necessary.
Mr Healy heavily criticised the response, saying Government “is quite entitled to make a complaint” and should have done so six months ago, asking “why is the Government deliberately avoiding sending in the garda”?
However, Mr Varadkar again dismissed the claim, saying “the Government does not have the authority to order in the fraud squad and that is not how it works”.
Update – 2.19pm: The Independent Alliance has called for a full criminal investigation into the tracker mortgage scandal.
The five-member alliance is a junior partner in the coalition government and in a press statement said allegations of fraud at the banks “merit a criminal investigation”.
This is despite the Central Bank saying it had spoken to the Gardaí twice, but had not reached the burden of proof to make a criminal complaint.
Speaking earlier, before the Independent Alliance statement, the Taoiseach told Independent TD Seamus Healy the Government did not have the power in a democracy to send in the Gardaí.
He said: “We are a democracy, it’s not the case that the Taoiseach, the former Taoiseach or the Minister for Justice can send in the Gardaí or send in the Fraud Squad.
“The way it works is that somebody makes a complaint to the Gardaí, the Gardaí consider the complaint and decide whether or not they need to carry out an investigation or carry out a raid as necessary.”
Earlier: The Taoiseach Leo Varadkar says 200,000 tracker mortgage customers need to be put back on the correct rate and compensated in the coming months for banks to avoid punishment from the Government.
The banks are due to release statements shortly following their meetings with Minister for Finance Paschal Donohoe.
Yesterday, Mr Donohoe said he was not satisfied with what he had heard from the banks.
The banks and Central Bank have yet to issue their promised statements meaning the Taoiseach was not asked about trackers until the very end of Leaders Questions in the Dáil as the main opposition was starved of new information.
Mr Varadkar said: “We want to make it clear once again that the Government will take further actions in the weeks and months ahead if we don’t see progress on this matter, and further progress quickly.
“That means restoration of those 200,000 people and their families to the correct interest rate, full compensation and redress.”
David Hall of the Irish Mortgage Holders Organisation says a fudge solution will not suffice today.
He said: “I think they have a lot on the table, a lot at stake today. Paschal Donohoe, his initial reputation as Minister for Finance is on the table today unless there is some clear progress.
“Not just words, but actual progress, but we don’t know what that is going to be.”
The most important reaction will be that of the customers who have waited so long.
The banks will issue statements on what steps they will take to address the tracker mortgage issue this afternoon, while the Minister and the Central Bank will issue updates.
If you have been affected by the tracker mortgage scandal and would like some assistance then please don’t hesitate to get in contact with Fin at firstname.lastname@example.org or phone-Dublin 01 6854458, Cork 021 4204122, Galway 091 782181.