Minister of State Michael D’Arcy Private Members’ Motion Opening Speech, 25 October 2017

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Fianna Fáil Private Members’ Motion on tracker mortgages

Minister of State Michael D’Arcy Opening Speech

25th October 2017


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I wish to move amendment No. [  ].

Cheann Comhairle

I thank Deputy [McGrath] for the raising this very important issue in the House this evening. 

As the Taoiseach recently stated in this chamber, the behaviour of the banks in relation to the tracker mortgage issue has been scandalous.

This scandal should never have happened and the Government is determined to ensure that it should not be repeated.

The Minister for Finance has now met the CEOs of the main banks namely Bank of Ireland, AIB, Ulster Bank, PTSB and KBC.

As Deputies will note, all five banks have now made statements unreservedly apologising to their behaviour.

This, however, is very much a belated development and on its own will be worthless.

The top priority now for Government is to ensure that all affected customers are identified and crucially that the wrong is put right through the payment of appropriate redress and compensation.

Let me be very clear on behalf of the Government, the time has now come for the banks to move urgently on this.

For the record, after meeting the Minister

  • AIB is now committed to the payment of redress and compensation to over 4,100 of their customers before the end of this year;
  • Bank of Ireland to 4,300 of their customers before the end of this year;
  • PTSB to almost 2,000 customers before the end of this year and
  • Ulster Bank to 1,000 customers before the end of this year.

KBC also expects to pay the majority of its impacted customers this year and all banks have committed to resolving and completing payments to outstanding impacted accounts in 2018.

The Government has also determined that a range of follow up actions will be pursued to ensure banks stand by these commitments.  Crucially, they must now actively and constructively engage with the Central Bank and provide all the information required by and within the timelines set by the Central Bank. 

The Minister for Finance has asked the Governor of the Central Bank to provide him a progress report by December – in particular, on whether or not banks have made acceptable and sufficient progress in line with the commitments they are announcing today.  Let me be clear to the House, if banks do not meet their new requirements other issues will be brought to the table.

Turning to the particular motion before the House this evening, I wish to first of all state that the Government very much agrees with the sentiment – and indeed the substance as well – of the motion tabled by Deputy McGrath.

While the Government is tabling an amendment to the motion, it is only seeking to make some very small adjustments to the motion; none of these it is suggested will detract in any substantive way from the initial motion.

In total, the Government is proposing three minor amendments to the original Fianna Fáil motion.

In indent number one, under the heading

“calls on the Central Bank of Ireland to:”

the Government proposes to delete the words “the Government” and replace it with the word “it” – the purpose of this change is to make clear that the reference is to the Central Bank.

It is considered that it would be more appropriate to refer to the Central Bank in this particular context given that the Bank is independent in the performance of its supervisory and regulatory functions in relation to regulated financial service providers.

The Government is also proposing some minor amendments to both the fourth last and second last indents of the motion.

In the fourth last indent, the Government is proposing to replace the current sentence to provide that consideration will be given to strengthening consumer protection laws if necessary.  As Deputies may be aware at this point, the Minister’s recent statement indicates that the has made a formal request under section 6A of the Central Bank Act 1942 as amended asking that the Central Bank prepare a report on the current cultures, behaviours and associated risks in the banks.   On foot of this report, the Government will consider and determine whether any additional legislative and regulatory changes are needed that would enhance accountability in the banks and ensuring customer interests are prioritised.   The Government is of the opinion that this will be a better time and context to consider legislative amendments which may better assist the Central Bank and the Competition and Consumer Protection Commission in fulfilling their roles.

The final amendment being proposed by the Government seeks only to recast the motion to request that the Central Bank of Ireland and the Financial Services Ombudsman consider introducing a helpline to assist bank customers in relation to tracker mortgage issue.  Having regard to their respective independent statutory remits, it is considered that this would be a more appropriate formulation of the understandable desire to help provide more assessable information to impacted, and potentially impacted, tracker mortgage borrowers regarding the status of their complaints.

While it is important that this Houses raises and discusses issues of very significant relevance to the public, and in particular on matters which have wrongly and adversely impacted on some households, it is also important to recognise the work the Central Bank has already done during the course of the tracker investigation. 

Since 2010 the Central Bank has been dealing with mortgage lenders on tracker mortgage related issues. The Bank had identified and pursued issues in relation to transparency with specific lenders regarding their borrowers who opted to switch from a tracker rate or who had a right to revert to a tracker rate after the end of a period where their mortgage rate was fixed.  Individual cases were also presenting to the Financial Services Ombudsman and that Office was making determinations on these cases, some of which were also coming before the Courts.  Also, due in part to these developments, the matter was coming to greater public attention more generally. 

Having regard to such developments, the Central Bank issued a public statement in October 2015 which indicated that it had commenced a systems wide examination of tracker mortgage related issues which covered, amongst other things, transparency of communications with and contractual rights of tracker mortgage borrowers. This examination has turned out to be the largest review ever carried out by the Central Bank on its consumer protection side. It covered fifteen mortgage lenders – eleven of which it has transpired have issues to address – who may at any time have sold a tracker mortgage product to a consumer borrower, and required the review of over two million mortgage accounts. It covers both banks and other regulated lenders and includes lenders who are no longer providing new mortgage credit. It also covers mortgages which have been redeemed or instances of tracker mortgages which have been transferred to another creditor.

The examination has required all lenders to examine the extent to which they have been meeting not only their contractual obligations to their tracker mortgage customers, but also compliance with their obligations under the Central Bank’s Consumer Protection Code and other consumer protection regulatory requirements in their dealings with their customers; in particular in the way material information was or was not provided to their customers to enable them make an informed decision on the options available to them regarding their mortgage.

However, matters are now coming to a head and the process of the payment of compensation will now intensify by all the banks.  Nevertheless, what is clear now for some time is that mortgage customers have been treated disgracefully by mortgage lenders and that many of them have incurred considerable loss or even greater harm – in particular those which have either directly or indirectly lost their homes due to this harmful action by lenders. Sadly some of the harm done to customers at this point is irreparable.  I believe that all parties in the House are in agreement that the banks behaviour has been completely unacceptable. 

To finalise, I would also like to pay tribute to Deputy McGrath, to many other Deputies in this House, to the members of the Joint Oireachtas Finance, Public Expenditure and Reform and Taoiseach Committee and also to many people outside this House who have over a long period sought to bring this scandal to public attention and to ensure that the harm caused to many impacted borrowers would be recognised and as far as possible at this point put right.  This work has demonstrated a high level of public service.     

However, as stated by the Minister in this House yesterday, we should be clear that it was the mortgage lenders that caused this harm to their customers and that the primary responsibility to urgently resolve the problem rests with them. Therefore, all lenders now need to bring the Central Bank examination to a conclusion without any further delay, and to do so to the satisfaction of the Central Bank and more importantly to the satisfaction of their customers which they wronged and to finally act in the best interest of their customers.


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