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Latest: Here's how the banks plan to address the tracker mortgage issue

25 October 2017 14:32
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The five banks that met the Finance Minister over the tracker scandal have issued statements on what they plan to do next.

Update 4.45pm: The banks are releasing statements following their meetings with Minister for Finance Paschal Donohoe.

"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."

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."

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 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.

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)

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 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.

"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, or write to the following address: Bank of Ireland Tracker Mortgage Examination, PO Box 400, Castleisland, Co. Kerry.

"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."

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.

It will all be followed by a Fianna Fáil motion before the Dáil tonight.


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